Trian Fund Management, the activist hedge fund firm founded by Nelson Peltz, has published a 133-page memo outlining strategies to enhance performance at entertainment giant The Walt Disney Company, according to a report by Fortune.
Peltz, through his hedge fund Trian Fund Management, is one of two activist investors vying for seats on Disney’s board. With a substantial $3bn stake under Trian’s control, Peltz has persistently challenged the company in recent months, waging a proxy battle against the entertainment giant. The other contender seeking board representation is Blackwells Capital, which holds approximately $15m in Disney stock.
In his extensive memo, which Trian has titled “Restore The Magic”, Peltz argues that Disney should reduce its reliance on sequels and reclaim the leadership it lost to Universal in animated films, following the latter’s record-breaking successes in “Minions: The Rise of Gru” and “The Super Mario Bros. Movie”.
He wrote: “While Disney has blamed the pandemic for poor film quality and results, its competitors managed to release some of the most successful animated films of all-time within the last year.
“Instead of seeking out new intellectual property to build on, Disney has focused too much on sequels and spinoffs, which “suggest a creative engine that is sputtering.”
“Sequels are less risky film ventures to produce, but do not drive long-term benefits in the same way that new IP can.”
Peltz specifically criticises CEO Bob Iger for lacking motivation to boost share performance due to his ownership of only $20m in Disney shares, compared to Trian’s multi-billion holdings. He also asserts that Iger has appointed friends and close contacts to Disney’s board, and that said board’s focus may be diluted due to several members also holding positions as CEOs or directors in other companies, such as Mark Parker, Chairman of Disney’s board, who also serves as Executive Chairman of Nike.
In the memo, Peltz also advised that Disney’s board review its studio operations and organisational culture in addressing a “spend what you need” mindset at Disney, leading to budget overruns and a lack of financial discipline.
