Disney Share Prices Rapidly Decline Due to “Woke” Posture; CEO Iger Deals With Activist Investors

Edited by: TJVNews.com

It appears that investors in Disney are losing their patience over the “woke, progressive” posture of the company and its share prices are in steady decline.  As was reported in the New York Post, investors ignored Disney’s cultural shockers such as promotion of homosexuality in children’s programming due to the company’s stock catapulting.

Longtime CEO of Disney Bob Iger, 71, had packed it in in 2020 when he announced his retirement. The problems with the company multiplied from there as the person replacing him, Bob Chapek was a poster boy for woke politics and was the cheerleader in that direction. Chapek was eventually taken on by Republican Florida Governor Ron DeSantis for opposing a Florida law that prevented schools from teaching sex ed to 6-year-olds and as a result, Chapek lost Disney’s special tax status, the Post indicated.

In mid-December 2022, the Jewish Voice reported that a 22 page lawsuit was filed by Disney investor Kenneth Simeone who claimed the company created a “far-reaching” financial risk for itself by opposing Florida’s controversial so-called “Don’t Say Gay” bill, as was reported by the New York Post.

The lawsuit demanded that Disney turn over its internal records about its opposition to the law limiting instruction on sexual orientation or gender identity in elementary schools, the Post reported.

By criticizing the law, Disney lost control over tax and improvement issues on the Orlando-based theme park, the suit said, as was indicated in the Post report. “The financial repercussions from Disney’s actions, and resulting harm to the company and its stockholders, have been swift and severe,” Simeone alleged in court papers.

According to Bloomberg News, the lawsuit is a so-called “books and records” action, demanding documents that can be used to later sue Disney directors over the decision to oppose the Florida law. Delaware judges often grant such file requests, Bloomberg said.

The “Don’t Say Gay” conflict blew up under Disney’s former CEO Bob Chapek, who initially wobbled on his response to the bill, opting not to weigh in. Drawing ire from Disney employees, Chapek came out against the bill, vowing that Disney would pause all political donations.

After being at the helm of Disney for two years, Chapek was let go as his programming severely faltered and his strategy for promoting the Disney streaming service did not prove to be fruitful, the Post reported. This, of course, created a downward spiral for Disney stock prices.

When Iger made his return to Disney he faced a corporate and financial disaster.

It now appears that two activist investors are looking to make their mark on Disney. They are Dan Loeb’s Third Point and Nelson Peltz’s Trian Partners, the Post reported.

The AP reported that Nelson Peltz is fighting for a seat on the board of Walt Disney Co., claiming that the company is struggling with self-inflicted problems.

Disney urged shareholders to vote against Peltz and named current board member Mark Parker as its chairman, the AP reported. Parker, who also serves as executive chairman at Nike Inc., succeeds Susan Arnold, who won’t stand for re-election due to Disney’s 15-year term limit requirements.

With the departure of Arnold, Disney’s board will shrink to 11 directors, the AP reported.

Peltz said that he should be elected to Disney’s board because of his prior experience turning around companies to improve performance and increase long-term shareholder value, as was reported by the AP. Peltz has previously waged successful proxy battles at blue chip companies including DuPont and Procter & Gamble. Peltz’s Trian Group said in a regulatory filing that he’s seeking a one-year term.

The AP reported that Trian argues that Disney’s recent operating performance is disappointing, and said that the stock is almost at an eight-year low despite the return of Bob Iger to the CEO post two months ago.

“The Trian Group believes that Disney’s recent performance reflects the hard truth that it is a company in crisis with many challenges weighing on investor sentiment,” the filing said.

While Trian acknowledges that Disney — which owns Marvel, Pixar and ESPN — is like many other media companies in the challenges it faces shifting from legacy content distribution channels to streaming, the group argues that it should still be performing better given its intellectual property, diversified business mix, and theme parks business, the AP reported.

The group says recent issues facing Disney are self-inflected problems, and according to the AP report, they are calling out what it considers failed succession planning efforts, a flawed direct-to-consumer strategy and “over-the-top” compensation practices, among other concerns.

Trian argues that if the 80-year-old Peltz is elected to Disney’s board, he’ll look to increase transparency and accountability, as was reported by the AP. The group said Peltz would focus on developing an effective succession plan, aligning compensation with performance and improving direct-to-consumer margins.

Trian is not looking to break up the company or replace Iger, who turns 72 next month.

The AP reported that Disney is recommending that its shareholders not vote for Peltz and addressed some of Peltz’s concerns.

“Iger has already taken decisive steps to realign content creation and distribution, and reposition Disney’s streaming platforms and linear broadcast and cable networks for enhanced profitability for the company,” Disney said in a statement.

Disney also announced Wednesday that Parker, who served as Nike’s chairman and CEO until 2020, will head its newly created succession planning committee. The AP also reported that the committee will advise Disney’s board on CEO succession planning, including the review of internal and external candidates.

While Disney’s theme parks business has been performing well, many visitors over the past two years have been highly critical of increased prices and other moves that the company made, including the end of the Magical Express bus service from the airport in Orlando, Florida to Walt Disney World resorts, the implementation of the Genie planning and ride reservation system and its theme park reservation system, according to the AP report.

To that end, the company announced on Tuesday several changes at its domestic theme parks, including some easier reservations, in order to improve the public perception of its business.