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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: Red headline crossing the Bloomberg terminal. This is the proxy

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Speaker 2: battle with Disney. Nelson Peltz not victorious. Disney's Bob Iiger

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Speaker 2: and the rest of company management has won that proxy

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Speaker 2: vote over Nelson Pelts and try and asset management with

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Speaker 2: the board election. That of course, is a meeting that

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Speaker 2: began roughly twenty three minutes ago. We did know coming

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Speaker 2: into the meeting, Joe, that Disney had secured the backing

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Speaker 2: and Iiger and his team had secured the backing of

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Speaker 2: prominent shareholders, the largest shareholders, including Vanguard and black Rock.

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Speaker 2: So perhaps this vote is not all too surprising the

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Speaker 2: ultimate outcome, but this is definitely a loss for Nelson

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Speaker 2: Peltz a win for Iger in his management.

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Speaker 1: It's pretty remarkable here that didn't take long, this meeting

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Speaker 1: still underway. Here the red headline that Kayley just mentioned,

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Speaker 1: we did hear reporting that Bob Eiger had the votes,

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Speaker 1: and he had some awfully prominent people behind him, not

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Speaker 1: just some huge institutional investors, but George Lucas himself, who

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Speaker 1: of course sold the Star Wars franchise to Bob Eiger

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Speaker 1: and helped to make this kind of the media empire

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Speaker 1: that it has become with Marvel and so many other

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Speaker 1: brands that he pulled together. The question, Kayley, as you

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Speaker 1: know all too well, comes down to not just recovering

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Speaker 1: from the pandemic the theme park business that's been pretty strong,

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Speaker 1: but what to do with streaming and how to make

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Speaker 1: that a profitable enterprise.

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Speaker 2: Absolutely, and of course that's one of the concerns that

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Speaker 2: Nelson Peltz has had why he was trying to get

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Speaker 2: on the board to initiate some of the changes he

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Speaker 2: would like to see in part relating to that business.

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Speaker 2: I would note that Disney shares are down right now

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Speaker 2: on the day, down by just over one percent. We

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Speaker 2: saw a small leg lower on this news, which again

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Speaker 2: is not all too surprising, Joe, but it does raise

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Speaker 2: questions of now that this proxy battle maybe done and dusted,

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Speaker 2: still the trajectory of the company going forward, considering we're

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Speaker 2: talking about a win for Bob Iger, who has left

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Speaker 2: Disney before and then had to be brought back, and

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Speaker 2: there is still a major question around succession plans and

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Speaker 2: what a post Iiger Disney ultimately is going to look like.

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Speaker 1: I wonder if we do learn more about that here today,

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Speaker 1: remembering as well, this is a stock that's actually been

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Speaker 1: up significantly over the past couple of months. Left for

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Speaker 1: dead about a year ago, this thing was down in

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Speaker 1: the what load of mid eighties at one point, Kaylee,

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Speaker 1: and here in the one twenties. It's been looking a

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Speaker 1: lot better, and we've seen a lot of the price

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Speaker 1: targets increased with this very moment in mind. And now

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Speaker 1: that this has happened, maybe this is a bit of

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Speaker 1: a sell the news situation.

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Speaker 2: Yeah, down about a percent again today, but up thirty

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Speaker 2: five percent to your point, show year to date thus far.

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Speaker 2: We want to turn now to geta Rongganathan who covers

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Speaker 2: Disney for us over at Bloomberg Intelligence, Keita, I know

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Speaker 2: you've probably been paying attention to what actually happened in

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Speaker 2: the meeting, but now we do know the result of

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Speaker 2: the vote. Eiger in Disney management victorious, Nelson pel Pelts

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Speaker 2: dealt a blow here. What happens next now that this

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Speaker 2: is over?

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Speaker 3: Yeah, I think it's definitely a vote of confidence on

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Speaker 3: Bob Iger. I mean, and I think it removes like

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Speaker 3: an immediate distraction. I mean, this has been a top

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Speaker 3: agenda item for Bob Iger ever since Nelson pell started

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Speaker 3: agitating in October of last year, and he has really

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Speaker 3: devoted a lot of time and a lot of resources

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Speaker 3: Kayley to this campaign. I mean he has taken it personally.

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Speaker 3: They've spent something like upwards of forty million dollars one

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Speaker 3: of the most expensive proxy battles ever fought. And he's

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Speaker 3: done a lot of things actually to take control of

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Speaker 3: the narrative at Disney. But in terms of any near

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Speaker 3: term changes, I think it's just going to be business

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Speaker 3: as usual. Obviously he comes out victorious. I think this

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Speaker 3: is definitely going to supercharge him and his efforts, but

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Speaker 3: there is going to be continued I think watch on

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Speaker 3: kind of how Disney performs. But obviously for today, I

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Speaker 3: think Bob Biger is definitely very relieved.

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Speaker 1: When you say, Githa, how Disney performs, you mean the stock, right,

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Speaker 1: This is only going to last as long as the

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Speaker 1: stock holds up. If we go back down in the

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Speaker 1: eighties again, I suspect we're having another conversation about Bob

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Speaker 1: Iiger's future in the direction of the company. Strategically, they

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Speaker 1: do have.

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Speaker 3: A lot of catalysts in place that should you know,

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Speaker 3: serve in kind of keeping up that momentum. So, you know,

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Speaker 3: the two of the core areas of their business. And

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Speaker 3: Disney is a huge diversified conglomerate, but Parks is one

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Speaker 3: of their core growth engines, and they really have put

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Speaker 3: Parks on a very very solid financial footing. So Parks

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Speaker 3: brings in about seventy percent of their profit. They're investing very,

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Speaker 3: very aggressively in this part of their business. They're spending

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Speaker 3: about sixty billion dollars over the next ten years. They're

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Speaker 3: going to add capacity, they're going to increase you know, attendance,

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Speaker 3: and it's going to bring in substantial amounts of profits

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Speaker 3: and really kind of set the company up for strong

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Speaker 3: earnings growth. Now, that is something that you really want

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Speaker 3: to see with a company like this. I mean, just

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Speaker 3: this year, we're going to see about twenty five percent

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Speaker 3: EPs growth in the Walt Disney Company, and I think

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Speaker 3: over the next couple of years we're going to see

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Speaker 3: again so sustained you know, twenty like double digit EPs growth.

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Speaker 3: That's unheard of, like in the media world. So obviously

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Speaker 3: Bob Bieger has taken a lot of right steps, and

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Speaker 3: I think we're going to see that continued momentum in

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Speaker 3: the stock price as well. Yeah.

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Speaker 2: I mean since he's returned, we've seen the elimination of

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Speaker 2: eight thousand jobs, he's cut over seven billion dollars in costs. Obviously,

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Speaker 2: when you reduce costs, that helps show up shore up

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Speaker 2: the bottom line. As you're speaking to Gita, but some

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Speaker 2: of the ideas that Nelson Pelts and try and Asset Management,

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Speaker 2: we're bringing to Disney things that they wanted to see corrected.

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Speaker 2: Even if they're not going to get the board seats

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Speaker 2: that they wanted, they still do own a sizeable stake

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Speaker 2: in this company, and I wonder how you think about

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Speaker 2: the influence they may still have on decisions moving forward,

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Speaker 2: and if this is going to catalyze even further change

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Speaker 2: at Disney, regardless of whether or not this proxy vote

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Speaker 2: ultimately panned out for Pelts.

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Speaker 3: I agree with you, Kaylee. I think it actually is

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Speaker 3: in a way, it is a good thing. Yes, it

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Speaker 3: was a distraction, but it has definitely expedited the process

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Speaker 3: of transformation and change at Disney. I mean we can

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Speaker 3: see that in the stock price, and I think what

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Speaker 3: we're really going to see with the board this time

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Speaker 3: around is obviously succession has kind of been a failure,

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Speaker 3: and I think in many ways the board has been

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Speaker 3: responsible for this, especially with you know, the whole Bob

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Speaker 3: Japek kind of fiasco. And I certainly think that the

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Speaker 3: board this time has to kind of take a much

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Speaker 3: more rigorous, a much more discipline, or a much more

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Speaker 3: thorough approach when it comes to, you know, vetting possible

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Speaker 3: candidates and choosing an appropriate successor for Bob Ayger. So

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Speaker 3: that's that's an area where I think we're definitely going

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Speaker 3: to see some real tangible momentum.

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Speaker 1: We spoke earlier Gith about some of the allies that

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Speaker 1: Bob Eiger gathered throughout this proxy battle, institutional investors, some

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Speaker 1: bold names like George Lucas, folks from the entertainment industry

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Speaker 1: who backed his effort, but also the Disney family. I

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Speaker 1: wonder to what extent you can tell us how the

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Speaker 1: family impacted this outcome.

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Speaker 3: Yeah, I mean, this is a really you know, when

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Speaker 3: you kind of look at the composition of Disney shareholders, right,

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Speaker 3: this is one of the few companies in the world

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Speaker 3: that has such a huge base of retail individual investors, right,

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Speaker 3: almost forty percent owned by you know, mom and pop

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Speaker 3: kind of shareholders, and everybody kind of identifies with the brand.

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Speaker 3: I mean, this is an iconic company, even Nelson Pels,

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Speaker 3: who kind of spoke today on the on the shareholder

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Speaker 3: meeting set, I mean, this is a company that is

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Speaker 3: so beloved, known for its brand's iconic, is such a

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Speaker 3: good company when it comes to creativity and storytelling, and

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Speaker 3: so I think that definitely played a huge, huge part

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Speaker 3: when it came, you know, to the votes today. I mean,

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Speaker 3: we know that Barbieger encouraged all of his people to

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Speaker 3: kind of call all the voters, you know, to really

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Speaker 3: kind of make this this decision, and I agree with

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Speaker 3: you that that definitely played into today's decision as well.

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Speaker 2: That finally, as you talk about the iconic brand that

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Speaker 2: is Disney, as you were talking a moment ago about

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Speaker 2: the kind of profit expansion we were seeing at Disney

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Speaker 2: that is unusual for other media companies, how should we

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Speaker 2: be thinking about Disney in relation to its peer group?

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Speaker 2: Knowing that in many ways it is different than say

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Speaker 2: a Netflix or another streaming company in that it has

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Speaker 2: much more beyond Disney plus, but what comparison should we

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Speaker 2: be making here and how strong would you characterize its

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Speaker 2: position in the face of competitors like that, and it's

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Speaker 2: many different businesses.

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Speaker 3: I think it is definitely one of the most strongly

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Speaker 3: positioned companies in the old media landscape. And I mean,

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Speaker 3: you know, dealing with these kind of TV headwinds, cort cutting,

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Speaker 3: you know, people kind of making this mass shift to streaming.

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Speaker 3: It's not unique to Disney. It's happening across the whole

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Speaker 3: media world, whether it's Warner Brothers, Discovery, Paramount. Disney has

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Speaker 3: a little bit of an advantage because they have that

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Speaker 3: sizeable exposure, not just to TV. I mean TV brings

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Speaker 3: in only about twenty twenty five percent of their profits.

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Speaker 3: They have that sizable exposure to parks, which really really

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Speaker 3: helps them. And then of course they've managed I think

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Speaker 3: that transition to streaming a little bit better. So they

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Speaker 3: obviously have more scale, they have better brands, they have

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Speaker 3: better content, so that kind of helps them or helps

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Speaker 3: set them apart a little bit. And as it comes to,

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Speaker 3: you know, catching up with Netflix, I think it's only

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Speaker 3: a matter of time. Obviously they were a little bit

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Speaker 3: of a late entrance. They only came on the scene

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Speaker 3: in twenty nineteen. Having said that, though, I think they've

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Speaker 3: really built up a lot of scale, and they've done

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Speaker 3: it pretty quickly. And what we're going to see now

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Speaker 3: is not so much building subscriber scale. It's really going

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Speaker 3: to be more in terms of building profitability. But I

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Speaker 3: think eventually we are going to get to those double

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Speaker 3: digit margins which Disney has promised, and so that will

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Speaker 3: kind of put them. I don't know if it'll put

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Speaker 3: them on an equal footing with Netflix, but they're definitely

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Speaker 3: catching up to Netflix pretty quickly. Eth.

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Speaker 1: Thank you so much for your analysis in the clutch

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Speaker 1: here at Bloomberg Intelligence. We can always count on our

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Speaker 1: colleagues at BI k Ley