Jim Cramer Endorses Nelson Peltz For the Disney Board
Nelson Peltz’s fledgling campaign to get a seat on the Disney board was thrown a lifeline yesterday when Jim Cramer publically endorsed the activist investor.
During the CNBC Investment Club annual meeting, Cramer lambasted Disney management for allowing its assets to become devalued, specifically citing the studio’s recent struggles at the box office.
“We need Nelson Peltz in there, and we need him badly,” Cramer said.
“I believe this company runs so poorly because there is no way you can have all this content and all this movie-making ability and, unlike Netflix, just put out bomb after bomb.”
Cramer then went on to run through Disney’s assets, saying a large number of them were no longer important.
“Their theme parks are doing so well, but they are obscured by the bombs. They’ve become unimportant, in the way that the owned and operated television stations used to be important and no longer…In the way that ESPN has now become irrelevant. I can’t believe that they’ve run every asset down like this,” he continued.
Cramer Says Disney Needs an Outsider
The answer, according to Cramer, is to bring someone from the outside onto the board. Someone like Nelson Peltz.
“We need someone from the outside. And we don’t want a ‘yes’ man in there. We need someone to get to the bottom of this morass. Shake things up. That board is chock full of smart, busy people…who do not seem to know that collectively, they have become a bunch of rubber stampers. Peltz can will change that.”
While Cramer’s praise of Peltz was certainly profuse, and his lamentations about Disney longwinded, the CNBC talking head failed to back up his argument with data.
The Problem with Cramer’s Argument
Saying that Disney’s multi-billion dollar theme park business has been “overshadowed” by the studio’s uneven box office results may be true when it comes to magazine headlines, but it doesn’t look to be true when one takes a look at Disney’s bottom line.
Additionally, Cramer would go on to suggest that Disney should “make a deal with the NFL” and “figure out how to fix the movie business.” Disney has previously been in talks with the NFL about equity in ESPN, and a deal may still be in the works. “Fixing the movie business” is quite frankly nonsense without more constructive criticism. If Disney could produce on-demand hits, it would.
Like Peltz, Cramer failed to articulately explain what Disney’s problems are and what can be done to fix them. Still, Cramer is a big name in the finance world, and Peltz is surely glad to have his support.
Following Disney’s strong Q1 earnings report and Iger’s slew of announcements, it seems that the Disney board is well-positioned to keep both the Trian and Blackwells candidates at bay.
The Nelson Peltz saga will come to a head on April 3, 2024, at The Walt Disney Company’s annual meeting.
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