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Walt Disney (DIS) announced its first-quarter results late Wednesday amid a new board battle with activist investors Nelson Peltz and Blackwells Capital. Meanwhile, ESPN, a subsidiary of the Dow Jones entertainment giant, is partnering with Warner Bros. and Fox to launch a new streaming service. Disney stock was trading in buy territory ahead of earnings.
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board battle
The Dow Jones giant is in the midst of a new proxy battle with Nelson Peltz’s Trian Fund Management and Blackwells Capital over influence over the company’s board of directors. Trian owns more than $3 billion in DIS stock.
Disney on Thursday asked shareholders to vote only on 12 director nominees and reject the nominees from Blackwells and Mr. Peltz’s Tryon Group. Trian named Peltz and former Disney chief financial officer Jay Laszlo to its board of directors in December, and on January 18, Netflix (NFLX) as a guide.
On February 1, Trian issued a letter to Disney shareholders advising them to vote against Disney director candidates Michael Froman and Maria Elena Lagomasino.
Separately, Blackwells Capital is seeking to seat three of the candidates on its board of directors. The company has named former vice president and general manager Jessica Schell. warner bros discovery (WBD); media and real estate entrepreneur Craig Hatkoff; and Leah Solivan, founder of TaskRabbit.
According to Tuesday’s proxy statement, Blackwells said the three will lead a review of media and content, real estate and strategic assets, and the physical and spatial computing and AI-driven experiences that will be critical to Disney’s future. Claims to be an expert. Shell can help it achieve “Netflix-like subscriber growth rates and Disney+ pricing,” the company wrote.
Blackwells sees Solivan helping Disney capitalize on artificial reality and virtual reality trends in its parks and experiences through his work as a general partner at Fuel Capital.
Disney separation proposal
Blackwells also discussed the possibility of separating Disney into three separate public entities “with a reorganization of management and selection of leaders for each business.” One proposal was to spin out the theme park and real estate holdings into a public real estate investment trust that Hatkov could oversee and implement. These represent 44% of Disney’s market capitalization, Blackwells said.
“Disney may be too complex for (Bob) Iger’s successor to manage overall,” Blackwells wrote.
The company also urged shareholders to ignore Trian’s efforts as a “distraction.” The paper noted that Peltz has requested a seat on Disney’s board at least 24 times in the past year and a half.
Another streaming service coming soon
Elsewhere, ESPN, FOX and Warner Bros. late Tuesday announced a joint venture to develop and launch a new sports streaming service in the U.S. this fall. The new product will combine content from ESPN, TNT and Fox Sports and feature major US sports leagues, many top university divisions, as well as the Masters, FIFA World Cup, Wimbledon, Formula 1 and more. NBCUniversal will continue to own the rights to “Sunday Night Football,” while Amazon will retain “Thursday Night Football” and CBS will maintain its package of Sunday NFL games outside of the joint venture.
The service will have a new brand and an independent management team, according to a release from Disney late Tuesday. Each entity will own one-third of the joint venture and have equal representation on the board of directors, while licensing sports content on a non-exclusive basis.
Pricing plans have not yet been announced. Variety reported that the new service will likely cost more than a standalone regional sports network, which typically costs $20 to $30 a month. However, it’s cheaper than larger streaming packages like Hulu+ and YouTube TV, which cost $75 to $80 per month.
Subscribers can also bundle this product with Disney+, Hulu, and Max.
disney revenue
Meanwhile, FactSet analysts expect Disney’s earnings to rise 1% to $1 a share, marking the second consecutive quarter of increase after four consecutive quarters of declines. Wall Street expects sales growth to slow for the third straight quarter, rising about 1% to $23.75 billion.
Analysts expect total streaming subscribers to total 223.93 million in the quarter, down a fraction from the fourth quarter and down 4.6% from a year ago.
Disney+ subscribers are expected to fall to 148.28 million, down from 150.2 million in the fourth quarter and 161.8 million last year.
Analysts expect Disney Parks revenue to fall 25% to $7.64 billion.
disney stock
DIS shares fell 2% early Wednesday after surging 2.7% on Tuesday following Blackwells’ offer. After clearing Friday’s buy point at 96.51, the stock remains flat for nine weeks and is in the buy zone.
Disney stock has risen 26% since its nine-year low in October. It remains more than 51% below the all-time high reached in March 2021.
Follow Harrison Miller on X/Twitter for stock news and updates. @IBD_Harrison
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