Restore the Magic: 2023’s Save Disney Remake
Disney and newly-returned CEO Bob Iger are facing a proxy fight from activist investor Nelson Peltz’s Trian Fund pushes for a seat on the company’s board. His group has launched a “Restore the Magic” campaign, which sounds an awful lot like a live-action Save Disney remake. This post delves into the details and offers our commentary about what’s in store as Iger squares off against Peltz.
Let’s start with brief background. For those who weren’t fans back then or have not heeded our many recommendations to read DisneyWar, SaveDisney was a proxy battle that began in 2003. Shareholders, stakeholders, and fans of Disney launched a campaign of concerns about the company’s performance and management, launching SaveDisney.con and undertaking a media blitz in the process.
The face of the Save Disney initiative was Roy E. Disney, the nephew of Walt Disney–who literally had a face that resembled his uncle. It was orchestrated by Roy and Stanley Gold, who were former members of Disney’s Board of Directors. These two felt that the company was not living up to its potential and that leadership changes needed to be made in order to improve performance and left to fight for change from the outside.
In particular, Michael Eisner lost the confidence of Roy E. Disney, with the latter believing Eisner was no longer the best person to run the Walt Disney Company. Roy had previously backed Eisner as CEO, but pointed to the untimely death of Frank Wells as a pivotal moment for Eisner, and the beginning of his unraveling as a leader. After that, Roy felt that the company had lost its focus, creative energy, and heritage.
The Save Disney campaign focused on several key issues, including the company’s management, strategy, and financial performance. Roy E. Disney and Stanley Gold criticized the company’s core values and strategy, arguing that Disney had become too focused on short-term financial goals at the expense of long-term growth and legacy.
Among other thing, the SaveDisney campaign pointed to Eisner’s failure to manage ABC programming and achieve key metrics at the company’s television networks. They also zeroed in on Eisner’s leadership–or lack thereof–which had resulted in creative brain drain with the loss of talented employees, as well as his refusal to establish a clear succession plan.
They also focused on weak investments in the theme park business, pointing to building Disney’s California Adventure, Hong Kong Disneyland, and Walt Disney Studios Park in Paris “on the cheap.” In addition to that, the consumer perception that the company is constantly looking for the “quick buck” rather than the long-term value, resulting in brand damage and loss of trust.
Occurring during the nascent days of the internet and online activism, the Save Disney campaign garnered attention among fans and shareholders thanks in large part to its impassioned website. The initiative was likewise successful in generating significant media coverage and in building public support. It became too big to ignore, and in the end, Eisner was stripped of his chairmanship before voluntarily resigning as CEO (a face-saving measure, to be sure).
Consequently, Bob Iger was named the successor CEO, and Roy and the company agreed to put aside their differences. The SaveDisney domain closed, publicity tour ended, and Roy rejoined the company as a Director Emeritus and consultant. With that, Iger made good on many of the stated goals of the Save Disney campaign. He invested significantly in the parks, acquired Pixar, and more.
Fast-forward almost twenty years later, and there’s a new proxy fight that bears a striking resemblance to the Save Disney campaign. Late last year, Nelson Peltz’s Trian Group took an approximately $900 million stake in Disney and began pushing for a board seat. At that time, Trian indicated it was seeking operational improvements, while it also opposed Bob Iger’s return as Disney’s CEO.
In the last week, this has intensified into a bona fide proxy fight. Trian Group filed a preliminary statement with the aim of putting Peltz on Disney’s Board of Directors. In that, Trian noted that it had met with various Disney leaders and board members, beginning with then-CEO Bob Chapek last summer. As basis for the battle, Trian pointed to poor corporate governance, failed succession planning, over-the-top compensation, and misguided spending and growth strategies at Disney.
In a likely attempt to preempt what could be a brutal battle with Peltz and Trian, Disney announced that Mark Parker would become the new chairman of the board and lead a newly-formed succession planning committee. As previously reported, Parker was once considered an interim CEO candidate (and in our view, should also be a future CEO candidate).
Shortly thereafter, Trian launched its “Restore the Magic” website and PR blitz, with Peltz making multiple appearances and doing interviews with financial media, speaking with CNBC’s Jim Cramer and several others. During those, Peltz has referred to his slide presentation on Disney’s many failures under both Chapek and Iger. Summarizing his issues with the company, Peltz has pointed to Disney’s poor share performance, noting that the stock currently trades near its eight-year low.
In that slide deck and on the Restore the Magic website, Trian makes a more detailed and nuanced case. While acknowledging that the pivot to streaming has been difficult for many media companies, Trian contends that many of Disney’s struggles are self-inflicted.
Trian also indicates that it is not attempting to create additional instability by replacing Bob Iger. In addition to not calling for Iger’s ouster, Trian is not pushing for the selling of ESPN or other TV assets. Rather, the group contends that Disney is at a crossroads and needs to make significant changes to position it for sustainable, long-term growth and success. Trian argues that it could help the company achieve this goals either via collaboration or the addition of one qualified addition (Peltz) to Disney’s Board of Directors.
Although I’ve watched multiple interviews with Peltz, I think he pleads his case far better in the slide deck than via interviews, so that’ll be the focus of this analysis. The slide presentation starts with background about Trian and Peltz, which aims at preemptively addressing characterizations that he’s a corporate raider or simply looking to cut corners to squeeze even more profitability out of the company.
It’s a persuasive argument, and one that is also corroborated by third party reporting. By most accounts, Trian has been successful in helping to turn around companies or at least improve their trajectories. For its part, Trian contends that it encourages management teams and boards to “operate as if wearing ‘bifocals,’ with a watchful eye on the near-term but always maintaining a primary focus on maximizing long-term value.” This orientation on the long-term value is an undercurrent of the presentation, and one likely to give it credibility with fans.
Following a rundown of Trian’s bona fides and case studies about its past successes in collaborating with other companies that had initially been proxy fight targets, Trian lays out its case for issues with Disney. The arguments boil down to three main categories: capital allocation, corporate governance, and strategy & operations.
The crux of the capital allocation argument is that Disney materially overpaid for 20th Century Fox, relying upon overly optimistic assumptions when valuing the business and how it would benefit Disney. Trian contends that the Fox acquisition is the proximate cause of many of Disney’s current problems. Among other things, this includes the elimination of the dividend.
Trian also points to a lack of proper succession planning, pointing to the recent Battle of the Bobs while also looking back further. In particular, Disney’s Board extended Bob Iger’s retirement date five separate times between October 2011 and December 2017, only to have him abruptly retire in early 2020.
The group also contends that several well-regarded CEO candidates left Disney, including Tom Staggs, Jay Rasulo and Kevin Mayer due to Iger’s repeated extensions. Beyond that, allowing him to stick around as Executive Chairman set up Chapek to fail. It’s pretty clear from this portion of the presentation that, even though Trian isn’t seeking Iger’s ouster, the group is not a fan of him. (Which also explains Disney’s strident opposition to Peltz having a seat on the Board.)
Much of the presentation also focuses on runaway spending with Disney+ and how it’s less cost-efficient than Netflix. This is despite
Disney’s best-in-class intellectual property and franchises, contrasted with Netflix’s lack of the same.
Trian argues that Disney+ started as a niche streaming extension of Disney’s franchise flywheel, but has rapidly shifted to the core distribution channel. That has resulted in Disney ramping up investment to drive new subscriber growth at all costs–but without the company laying out a financial rationale behind the strategic pivot, which has put significant stress on Disney’s balance sheet and cash flow.
Finally, there’s the “good stuff” for readers of blogs like this one and fans of Walt Disney World and Disneyland. This slide is reproduced above so you can see Trian’s position in full. The group contends that Disney has historically relied on price to drive growth and margin at domestic Parks–an unsustainable growth strategy. Disney’s domestic Parks & Resorts had previously grown per capita guest spending at a 6% from 2011-2019, which spiked sharply to approximately 40% versus fiscal 2019 in the last two years.
Here, Trian’s core thesis is that price increases and nickel & diming is short-term thinking that puts the brand value and long-term health of Disney’s theme parks business at risk. I couldn’t have said it better if I wrote it myself. Oh wait, I have… many many many many many many times. Well, I couldn’t have said it more concisely. (Honestly, I think Trian should’ve been less concise, focusing far more on intangibles like this–especially if they want support from fans and Cast Members and not simply institutional investors.)
All of this will sound familiar if you’ve read fan blogs like this one, but also if you look back at the goals of the Save Disney campaign. History never repeats itself, but it often rhymes is very apt here. While some of the specifics differ (for example, streaming wasn’t a thing in the early aughts, but Disney’s broadcast strategy was similarly criticized), it bears striking similarities to Save Disney.
Honestly, this feels like one of Disney’s beat-for-beat live action remakes of a beloved animated film. Not nearly as good due it lacking the same heart and emotion, but one that will likely outperform at the box office (or in this case, on the internet) due to fundamental changes in the nature of distribution.
The heart and emotion that “Restore the Magic” lacks as compared to SaveDisney is the face of each campaign. Again, Roy E. Disney looked like Walt. Every time he appeared in interviews, it was a powerful visual reminder of the company’s rich creative legacy. It was impossible to ignore the reality that someone who looked like its visionary founder did not agree with the direction of the company.
Not only that, but Roy walked the walk and had incredibly strong support from animators and other Cast Members. He was beloved for arguably saving Disney once about a decade earlier, and the company’s best interests were core to his campaign. Disney and Eisner couldn’t really “hit back” in a way that resonated with the public.
There is no one alive today who can generate that same emotional response. There’s only one member of the Disney family who still has a relatively high profile, but she’s polarizing and unlikely to support this proxy fight.
Nelson Peltz does enjoy a powerful reputation among investors, but he too is controversial and has no chance of garnering the same widespread support as Roy E. Disney, son of Roy O. and nephew of Walt. In short, there’s no one who can step into Roy E. Disney’s shoes for an equally impactful Save Disney sequel. So we’ll have to settle for this heartless remake, I guess.
The thing about soulless sequels and remakes is that they still can have value. The same can likely be said for “Restore the Magic,” albeit in very different ways. For fans, I think the saying that (corporate) politics can make strange bedfellows is probably apt.
While Nelson Peltz is no T. Boone Pickens, fans will undoubtedly question his true motivations. Sure, the “Restore the Magic” website and slides talk a good game, but if there’s one thing with which Disney fans have intimate experience, it’s slick and misleading marketing that attempts to leverage emotion.
With that said, I see the “Restore the Magic” campaign as a positive for fans and the company as a whole. For one thing, it’s undeniably accurate in several regards. Succession planning has been a mess, Disney’s streaming strategy has chased Wall Street expectations and valuations, and the 20th Century Fox acquisition and accompanying debt is now an albatross for the company.
Then there are the contentions about the over reliance in Parks & Resorts, which have been “over-earning.” The last few years have undoubtedly reflected short-term thinking to drive profits and prop up the company’s numbers at the expense of long-term health and fan goodwill.
Specifically, I think the company and fans will benefit from this proxy fight, even if it’s ultimately unsuccessful, because it provides a meaningful “check and balance” on Disney. Consider this pitch along with the knowledge that this back and forth between Disney and Trian began over the summer when Bob Chapek was still CEO.
Those two things in tandem help recontextualize a lot of what has happened in the last several months. This definitely helps explains the very abrupt announcements of 3 BIG Changes at Walt Disney World to Improve Guest Experience & Value and Good Changes Coming to Disneyland: Park Hopping, Ticket Prices, PhotoPass & Annual Passes.
At the time, those announcements felt like CEO Bob Iger and Parks Chairman Josh D’Amaro following through on improvements they hinted were coming, and ways they disagreed with Bob Chapek’s approach to the guest experience at Walt Disney World.
In fact, we might go back even further, reassessing the leaks from Bob Iger’s camp in the aftermath of his return. It’s now possible to view much of that through the prism of this proxy fight with the benefit of hindsight. If we’re reassessing how the last few months have played out, we also can’t help but wonder if Disney’s Board of Directors brought back Iger to gear up for this fight, feeling that Chapek was not up to the task.
Frankly, some of that veers into conspiratorial territory. We’ve been raising the red flags on guest satisfaction and how D’Amaro and other leaders at Parks & Resorts have had their hands tied since early last year. The topic of damaging brand affinity and guest goodwill has been a hot topic for far longer, dating back to the first Iger regime. (Admittedly, it has gotten far, far worse in the last 3 years.)
In short, it’s highly improbable that this standoff with Trian and Peltz is the sole factor for any past, present, or future changes at Disney that undo past damage. Such a simple explanation would be convenient and easy to accept, but also reductionist and overlooking how this played out in real-time. Conversely, it’s impossible to dismiss this new proxy fight information as entirely coincidental–it almost certainly played a contributing role in what has played out thus far.
To that point, the proxy fight will almost assuredly prompt additional positive changes at Disney. Iger and the company do not want Peltz on the Board of Directors, and the easiest way to avoid that, ironically, will be voluntarily making some of the requested changes and improvements.
Among other things, this means reining in runaway spending on streaming content, clear succession planning, and deleveraging. For Walt Disney World and Disneyland, it also likely means more manageable price growth, less nickel & diming, and improved guest satisfaction. It also just might mean park expansion projects are given the green light, as a good faith showing that there’s long-term vision of the parks and they don’t exist to simply subsidize streaming losses.
Ultimately, this proxy fight strikes me as a good thing for Walt Disney World and Disneyland. There’s going to be an understandable skepticism among fans of an investor who is characterized as a corporate raider. That’s doubly true after years of corner-cutting in the parks and price increases aimed at meeting Wall Street expectations of quarterly gains.
However, this feels different. Based on the totality of the presentation, it appears to me like Trian is interested in the long-term health and viability of the business, and not just looking to make a quick buck. There’s an alignment of interests between fans and Trian and minimal downside risk to Peltz having a single seat on Disney’s Board of Directors–or at least pushing for one.
Honestly, I don’t really care whether Peltz succeeds or fails. While I’m receptive to his presentation and position, I’m also still slightly skeptical of his underlying motivations. His track record as demonstrated by Trian’s cited case studies is strong and positive, but Disney is also a very different beast.
Specifically, “lack of cost discipline” is a double-edged sword for creative companies, and one that gives me pause when it comes to Trian and Peltz. It’s fair to say that Disney is not equivalent to Heinz or Pepsi, and cost-cutting could very well undermine the core creative output.
It also doesn’t seem entirely fair to Monday morning quarterback the Fox acquisition; it definitely seems like Disney overpaid, but Iger had a strong track record before that with brilliant acquisitions. Disney would not be where it is today without his M&A prowess.
With all of that said, it’s the fight that has value for the company and Disney fans, not the eventual outcome. That will be especially true if Trian recalibrates its public-facing presentation to focus more on Cast Members and the guest experience (as they should–use different messaging for investors and fans) and shines a light on the long-term damage to the parks done since 2020.
The company has milked the Walt Disney World cash cow to the point that it was almost put out to pasture (to mix livestock metaphors) for many fans. Hopefully this proxy fight results in further reversal of that as the company seeks to undo damage from Bob Chapek’s Reign of Terror™️ while also undercutting Trian’s arguments for why it needs a board seat. We’ve already seen steps in the right direction from D’Amaro and Iger indicative of a foundational paradigm shift for the parks. Here’s hoping for more of that in 2023 as Disney attempts to fend off the proxy fight and win over Cast Members, fans, and long-term investors.
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YOUR THOUGHTS
What do you think about Trian’s “Restore the Magic” Campaign? Skeptical about that Nelson Peltz’s real motivations, or think he’s truly interested in long-term success? Think this will be as beneficial for the company as the SaveDisney initiative? Optimistic that this will push Iger to finally get serious about choosing a successor or focus on improving guest satisfaction in the parks? Think things will improve or get worse throughout 2023? Thoughts on anything else discussed here? Do you agree or disagree with our assessment? Any questions we can help you answer? Hearing your feedback–even when you disagree with us–is both interesting to us and helpful to other readers, so please share your thoughts below in the comments!
“The company has milked the Walt Disney World cash cow to the point that it was almost put out to pasture (to mix livestock metaphors) for many fans”
A sad, but true statement. We actually ended up renting out our DVC points this year and very well may do the same for 2024. It will depend on what happens in the coming months. I will say though, the previous changes have at least given hope that things will improve.
As someone who has been reading Peltz’s cost cutting suggestions to Wall Street in financial articles for several weeks, I agree that it’s questionable whether he believes in restoring Chapek’s cuts or continuing them in a shinier, less stinky package. As long as Disney reacts by doing good and smart things, does it matter?
While I have concerns about long term board members who are highly invested in their companies becoming focused solely on a quarterly profits and stock prices, it is absolutely true that Stanley Gold (working with Roy E. Disney, of course) helped transform Disney twice.
20th Century could have been a good purchase at the time, given the then low and stable interest rates, the sale of the regional sports networks, and Wall Street’s then-determination to treat streaming services less like entertainment companies (revenues and profits are important) and more like tech companies (growth above all). In retrospect, the biggest mistake of that was buying and holding onto Fox’s third or so of Hulu when there were already plans in motion to start another major streamer from scratch.
“I agree that it’s questionable whether he believes in restoring Chapek’s cuts or continuing them in a shinier, less stinky package.”
Based on everything I’ve seen, it seems more likely that the bulk of the cuts would be made to rein in streaming spending. As someone who thinks that’s absolutely out of control and unsustainable across the board (Paramount is spending $22 MILLION per episode of 1923, as one of many examples), I’m completely fine with that.
People are already complaining about streaming service price increases, but I don’t think they realize just how massively these companies are subsidizing costs. The dominant ones will be fine eventually, but it’s hard to see Paramount+ and Peacock (two services we watch more than Disney+) and other smaller players being viable in the long-term.
Scaling back streaming expenditures–or at least pushing to make them profitable, faster–would alone help parks & resorts IMO.
@Tom Bricker What also makes me sad about the severe subsidization of streaming in the race to dominate/position for the future is that it has seemingly cannibalized from the movie theater business. I live in NYC and just learned today that the two closest multiplexes to me (Regal Union Square) and (Cinepolis Chelsea) are both shuttering. I still really enjoy seeing movies in a theater format (even in our covid era, I just throw on my KN95 and go) and had been enjoying the upgraded amenities of the past years (nice seats, better food, reserved seats). I think I’m an age bracket similar to you and I can’t believe I’m somewhat living through the end of “going to the movies!”
“Specifically, I think the company and fans will benefit from this proxy fight, even if it’s ultimately unsuccessful, because it provides a meaningful “check and balance” on Disney. “
Basically this. However the prices need to stay at the higher end to control crowds I would assume, and give people at deluxe resorts more than a 30 minute headstart- there has to be value- by added extra time or extra fast pass rides( triple or double dip) – I can dream lol
I don’t understand why people keep saying they have to raise prices to control crowds. Can’t they just allow fewer people in the parks? That’s what this park reservation system was supposedly for.
Prices are not going to go down. That is not something I’ve heard is even on the table as a possible change. At best, they’ll increase discounts–but only to the extent necessary to hit occupancy targets. A slowing of price increases is also possible. If either of these things occur, it’ll be because of the broader economic environment, not any of this.
The changes we are most likely to see are ones that decrease nickel & diming and pointless upcharges–and anything that can improve guest satisfaction scores. People hoping for lower prices are going to be sorely disappointed, as that is not being considered.
If Disney stops raising prices, they will have to control overcrowding some other way. The world’s population keeps growing, and the middle class in other countries keeps expanding. These parks will just get more and more crowded. So Disney either must raise prices to price some people out (destructive to its brand) or build more spaces to consume the increased crowds (which they don’t have capital to do so due to streaming losses). The last few years have really put them in a pickle of their own doing.
“If Disney stops raising prices, they will have to control overcrowding some other way.”
Restoring more entertainment and extending park hours (especially at Magic Kingdom) would effectively increase park capacity, thereby lowering ‘feels like’ crowds and improving guest satisfaction–two birds with one stone.
This is just one of several ways to solve for the crowd problem without raising prices.
We spent so much at Disney last time Infigured I can take the family to Hawaii cheaper. We’re going there instead this year. My 12 year old has been to Disney more than 20 times, so, yeah, we’re big fans. The last few visits made me want to take a break for a while. Cast members had no power to correct the wrongs disneys tech caused, we’re afraid to say the wrong thing-eg they don’t say hi to our kids anymore cause they are afraid of what to call them. Used to be prince and princess…. Every toy you buy there breaks the same day. Brand is being sold out.
But I’ll be back. It’s still fun. …ha. Please excuse the grammar/spelling above. I didn’t proofread and didn’t realize before posting I couldn’t edit.
I’m a long time fan and continue to visit WDW which in a sense, make me part of the problem. But I have been getting frustrated these past 5-6 years. It’s been hard for me to watch the neglect in some cases, diminished new builds, and the elimination of so many perks that have coincided with rapid and large price increases. The monorails are old and need to be replaced. Epcot needed attention over a decade ago and after it was announced that it was being refurbished, it got scaled back. Spaceship Earth, Figment, Soarin, Mission Mars, and the land Pavilion need renovation and they are not getting it. Peter Pan, Pooh, Carousel of Prog, need updates. Small world needs it queue cleaned up and the boats too. Other parks have beautiful night parades but the MK still has none. It should have the best as it is the most visited park in the world. reduced Park hours to make way for parties. Virtual Queues and Expensive Genie +. Ugh. But so happy they are pushing the Splash Mountain redo to the front of the line.
I am just commenting to say I read this article while riding it’s a small world. I hope Disney’s future continues to be bright as they realize that ultimately consumers are smart and their legacy is only as rich as their planning for the future which values the integrity of its product and value for $ matters. Disney needs to find a way to do more with less in terms of media output. It used to be one awesome movie every couple of years was enough to capture the love of the public. Now there’s a glut of content and it has watered down their impact.
Great article. Spot on observations. I’m very hopeful going forward. Now I just have to live that long.
If you were a DIS stockholder would you vote for Trian’s candidate for the Board? I think I might.
Many people say they are done with Disney primarily due to the price increases….and I agree partially. For me, yes, the price gouging turned me off to Disney, but only because it was combined with providing less for the increased prices. Genie+ might have been palatable to me if it operated like Fast Pass – e.g. you could make your reservations in advance of your trip. But to charge for it and then deliver the unholy mess that is Genie+, and then make you spend all day on your smartphone instead of having fun was unbelievably stupid. They could have simply taken the existing Fast Pass system (which worked well) and charged for it. Easy peasy. The charging for a magic band when you’re paying steep prices for rooms is also unbelievable stupid. And then taking away the Magic Express, which was the single thing that distinguished Disney by immersing you in the Disney bubble, was simply unconscionable. This was the single thing that made my family cancel the 10 day vacation we reserved once we heard of it. Talk about short term profit taking at the expense of their long term reputation. All these take aways only resulted in small change in the overall scheme of things, yet the long term damage will cost them 1,000 times more – mark my words.This year we’re doing our family vacation at Universal, where you actually feel welcome as a guest instead of an ATM machine.
Tom,
Well said!
Totally agree with everything you said! Our family has been frequent visitors to Walt Disney World since 1992!
Totally agree with everything you said almost! Genie+ needs to go! The fast pass system needs to return, and park reservations need to go.
Totally agree. And why do the amenities at the resorts close so early. I took my niece for a swim and found that although the pools close at 10:00 the bathroom closes at 9:00. How does that make sense? Do we they want the kids to use the pool as their toilet?
Agree with everything you say. We’re from the UK and couldn’t possibly do what we used to do – it would be £14,000+ for our 2 week holiday. It was bad enough when it was 10k pre-CoVid but we have amazing memories. They never ever will drop ILLs and paid G+. I reckon they will make $100m/pa on ILLs from Tron ALONE. But what this “new money” does give them is capital. So I could see those new areas mentioned at D23 actually coming. They have to otherwise in 20 years we will all be too old (and poor) to come and our kids will be at a Universal park near them!
Great article! And I didn’t think you could outdo your trademark claim on the Giant Epcot Dirt Pit, but Bob Chapek’s Reign of Terror is hysterical!
Tom,
Sorry to say this but Disney broke the magic. Genie+ needs to go. Bring back the free Fast Pass, and get rid of the reservation system. Bring back fast food that is edible. I can’t justify spending money for a week vacation that is anything but. First trip to Disney World was back in 1977. Since Disney doesn’t seem to value those people who spend a week there or more who stay on property I just can’t justify it. Imagine if you paid for a 7 night stay for $300 or more a night and they can’t even give you a free magic band which costs them less than $5 to make. Magic Express was nice, but was nicer about it for me was drop off at airport and luggage was in your room. It’s those little things that made Disney, Disney. They are not going to fix it
This is a fight that needs to happen in Disney. Like you said, there needs to be some kind of check against the short-term profiteering and some thoughtful action to long-term planning and company viability. Disney has been burning the good will of its own base of customers by the squeezing of the parks, to throw badly spent money on half hearted attempts for D+ programming that keeps falling flat. You can’t pretend to keep increasing subscribers every time you release something new on streaming. You actually have to do the hard work of making streaming cost effective. The Mandalorians’ Volume technology has gone a long way in that direction, making scenes that required expensive location shoots and sets viable. They may need to turn the Imagineers into the movie making process in reverse of Walt’s day to help expand their capabilities to make content for D+ cheaper.
Solid article. I’m not sure all that Disney has planned will bring the magic back, though. Magic is a tough thing to create. It’s when you wow your customer with something they love that they didn’t expect. It’s silly, I suppose, but as a parks and entertainment consumer of a decade plus, I had a real affection for Disney that I didn’t have for other brands. It was welcoming, friendly, happy, safe, and yes, magic. Now I see their brand as less welcoming, bland and homogenized (looking at you, resort room renovations), expensive, and struggling operationally, with underinvestment in resources and Cast Members. Universal is probably the same, but I never expected as much from them, so I’m always pleasantly surprised. I never say never, but definitely not yet.
This hit the nail on the head for me!
I can’t stand the new Disney. Through the years we have visited over 50 times and our last visit was 2018. I don’t see going back until Disney reverses many of their recent decisions. They are going in a direction that I don’t like at all. I’m displeased with the lack of entertainment especially with the lack of street performers. Also, the expense factor is ridiculous. By comparison you can get a season pass for Dollywood for the cost of one day at Disney World considering park admission, genie plus and lightning lane fees.
Sharon
Well said!!! I really miss the entertainment at Disneyland, I loved going to the Hyperion Theatre (I hope I spelled that right), the Royal Theatre etc. The street performers were great as were the shows at the Golden Horseshoe.
Thanks for your comments
I probably can’t comment adequately on all the business details in the blog BUT I can comment that as a former fan of all things Disney, and one who has been many times with family, I am DONE. I won’t go back. I’ve been priced right out and resent the gouging.
THIS! I rarely comment on anything just to say that I agree completely, but you are spot on. Whoever wins the battle, hopefully it’s ultimately the fans who have been struggling with whether to hang on.
Competition is good for business. In this case, the business is the board. I think of it like this: If everything was working great and the company was thriving, then they would not have activists pushing for change. I agree I think this helps the company both short term and long term.
The picture selection with the text was some A+ work in this one.
Really interesting article. I had read/heard some things here and there about this going on but not with as much detail. Thanks for sharing the link to the slides. Love getting a look at some inside baseball.
Peltz is 70-80 years old but this is the first time he has expressed an interest in Disney’s “Magic” continuing? If he really had an interest, we would have heard from him before. As in all things, follow the money. He wants a board seat not because he has this interest but because for every dollar he is able to get Disney’s share price to go up, Trian makes $10,000,000 (10,000,000 shares x $1). If/when Disney’s share price ever rises to where it was a few years ago ($197/share), would any of us be surprised to resign his seat and take his $107,000,000. Disney needs board members who are not in it for the money but in it to restore what Walt stood for and how he handled the company.
Yep. Peltz has an agenda and it isn’t to make legacy wdw fans happy.
John I believe you are spot on. That’s a whole lot of money to leave on the table, and if he can launch a “wholesome” campaign to drive the share price back up, he will win what he really wants.
Agree completely. Peltz and Trian are noted for starting proxy fights for companies they view as undervalued (Pepsi, P&G, DuPont, Heinz). They are in it for a short term increase in the price of their shares. How do you achieve short term stock price increases? Increase profits. How do you increase profits? Increase revenue (money brought in) versus costs (money spent). That is, you charge more for less. (Or worse, you force a sale of the company – almost completely unlikely given the size of Disney – or divestitures, which are possible and maybe even beneficial for Disney to consider, but should be considered by those who have the company’s best long term interest at heart). Anyone who thinks a corporate raider with no long-standing ties to the company will help consumers simply does not understand corporate America. He might help institutional stockholders if he could increase stock prices, but never consumers.
Disclosures indicate that Trian’s time-horizon is 3+ years; this is oriented towards a 2025 and beyond target.
From the contents of the presentation (and Disney’s response), it’s pretty clear the cost-cuts are aimed largely at DTC with more investment recommended in Parks & Resorts. For those who are primarily consumers of the latter, this could very well be a net-positive. (Probably not so much for streaming fans.)