That didn’t take much.
After Walt Disney Co delivered earnings Wednesday that beat expectations and announced a plan to cut $5.5 billion in costs, activist investor Nelson Peltz said this morning that he was ending his proxy fight against the media giant.
With the heated proxy filings that both Peltz’s Trian Partners and Disney had fired off foreshadowing a brutal boardroom battle, Peltz’s quick retreat was surprising. But the fast and relatively easy victory for Disney will only solidify Chief Executive Officer Bob Iger’s mythology as one of corporate America’s most iconic CEOs. And Disney’s board, whose reputation had been marred by botching Iger’s succession in the first place, comes out looking like a winner for deciding to bring back the conquering hero.
Yet it’s hard to ignore that some of the strategy Iger outlined in the earnings call echoed that of his handpicked predecessor, Bob Chapek, whom the board ousted late last year to make way for Iger’s return. After reporting a disastrous quarter in November with a $1.5 billion loss in the streaming business that ultimately led to his undoing, Chapek said the company would cut costs and eliminate jobs — both core elements of Iger’s plan. Chapek also promised that Disney’s streaming business would turn a profit by 2024, the same timeline presented by Iger on Wednesday. The biggest change from the Chapek era is Iger’s reversal of a restructuring that eroded the autonomy and power of the content division heads, leading to complaints of curtailed creativity.
What truly made the difference was not so much Iger’s strategy but his delivery, his style rather than the substance. He had a little something for everyone during the earnings call. He used some variation of the word “creative” no less than 15 times, a concession to the employees who felt as if they had been stifled under Chapek. For investors, including, of course, Peltz, who went unmentioned on the call, he and Chief Financial Officer Christine McCarthy hit on “profitability” 10 times. The cherry on top was Iger’s announcement that the company planned to reinstate its dividend.
Iger led things off on the call by trumpeting his own credentials, saying that since he first became CEO in 2005, he already had overseen two Disney transformations. The first was the acquisitions of Pixar, Marvel and Lucasfilms, which turned Disney into a true content and branding powerhouse. But it’s worth noting that the second of those transformations that Iger highlighted — the company’s evolution into a streaming giant — is still a massive money-losing endeavor. The streaming business is at the core of what Iger must fix. It is a testament to Iger’s skill as a storyteller and statesman that he has been able to position himself as savior to some of the problems he helped create.
Iger departed the CEO job on top in 2020, and he returned on top less than three years later. But now he faces the realities of running the company and executing on his newly outlined vision. Some of the biggest challenges in front of him have nothing to do with financials. He must continue to navigate Disney’s unwanted position as a prime target in the culture wars, which Florida Governor Ron DeSantis has shown no sign of conceding. And he must undo his biggest defeat as a CEO by finally figuring out how to successfully hand off the top job to a successor.
Now with Peltz out of the picture, he has one less excuse if he again fails to deliver a fairytale ending.
Beth Kowitt is a Bloomberg Opinion columnist covering corporate America. Views are personal and do not represent the stand of this publication.
Credit: Bloomberg
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