The Walt Disney Company (DIS) has emerged victorious in its proxy battle against activist investor Nelson Peltz. With the focus now shifting to Disney's plans moving forward, TD Cowen's Managing Director of TMT — Media & Entertainment Doug Creutz, joins the Morning Brief to discuss the expected fallout and what lies ahead for the entertainment giant.
Creutz expresses no surprise at Disney's victory, stating that he would have been "shocked" if the results were any different. While acknowledging that Peltz "identified some things that Disney had mishandled in the past," Creutz does not believe the investor had any "interesting" plans for Disney's future.
Looking ahead, Creutz hopes that Disney plans "to lead the charge" in re-bundling its direct-to-consumer services, calling it "the biggest issue the industry faces." He notes that leaving these channels separate has created additional costs for the business, but this approach could combat that issue. Creutz cites the Warner Bros. (WBD) and Fox (FOX, FOXA) joint ventures as good starting points, but adds that "it's a long way from getting back to a bundled product."
Regarding succession plans at Disney, Creutz says "it's still not clear." With the company having long been considering potential replacements for current CEO Bob Iger, "there is a lot of pressure on the board" to figure it out before the 2026 deadline.
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Editor's note: This article was written by Angel Smith
Video Transcript
BRAD SMITH: Disney came out on top in its high profile battle against Activist Investor Nelson Peltz ending months of uncertainty over who will sit on Walt Disney's board. The entertainment giant saying Wednesday at its annual shareholder meeting that the current Disney board will remain intact after 75% of retail shareholders, they voted in favor of Disney's current board according to a source familiar with the situation.
For more, we're joined by Doug Creutz who is the TD Cowen Managing Director and Senior Research Analyst covering the media and entertainment landscape, and Yahoo Finance's Senior Reporter Alexandra Canal. Doug, great to have you here with us this morning. First and foremost, just want to get your reaction, are you at all surprised by what we saw?
- No, I would have been shocked had Peltz or Blackwell's won. I think they just didn't have a lot of vote. They had to convince an awful lot of shareholders to go with them. And I think, you know, while they identified some things that Disney had maybe mishandled in the past, I don't think they had much in the way of a plan for the future that was particularly interesting. So no, I'm not-- I'm not surprised by this at all.
- All right so, Doug, here we are today. What happens then next for Iger? We talk about what his priorities should be, obviously, stemming some of the losses that we've seen within the streaming business. But from your perspective, what should be number one on his plate?
DOUG CREUTZ: Well, [CHUCKLES] from my perspective, I think Disney ought to be leading the charge to rebundle all the disparate direct to consumer services out there together. I think that's the biggest issue that the industry faces, is that by leaving bundle behind and going direct to consumer, you've created a lot of overhead additional costs that didn't exist before, both in terms of acquiring users and also in terms of having to overprogram your service relative to what programming you needed in the bundle before.
I think that's the direction they should be going. We saw a little bit of that with the streaming JV, the sports JV they announced with Warner and with Fox. I thought that was a good sign. But it's a-- it's a long way from getting back to a bundled product. Which, by the way, I think in the long run will be better for consumers. It was great when you could pay $7 a month to get tons of programming and no advertising.
But now increasingly, these services are raising price aggressively, asking consumers to watch advertising. You're seeing major sporting events, the NFL playoff game recently was exclusively through a streaming product. A lot of consumers weren't happy about that. So I think getting back to a bundled product will help the industry and ultimately be better for consumers. I don't know that he views that as a priority but I think that's what it should be.
ALEXANDRA CANAL: And Doug, another big priority of Disney is succession planning and that was a big thing, a big conversation amid these proxy battles. When it comes to the board moving forward, how much more pressure are they going to face post-proxy battle? Because this was very high profile. I would assume that now a lot more eyes are on this board to really deliver returns for Disney.
DOUG CREUTZ: Yeah, look, they've been trying to figure out how to replace Iger for 10 years, literally. They thought they had a replacement in Bob Chapek but he turned out not to be the guy. It's still not clear that there's somebody internally that's ready to step into the job. And I think to try and get someone externally is very risky given that Disney has a very strong and unique culture, an external candidate might be a bad fit for that.
So there is a lot of pressure on the board to find a successor to Iger. I think there was before Peltz raised his hand. I think there is after Peltz has moved on. And that is something that I think investors-- I think right now, 2026 still seems like it's far away. So if you're investors, you're sort of looking at the optimistic outlook for earnings this year and some of the things Disney announced on their last call, like the sports JV and can be excited about that. But as you get closer to 2026, that's going to be more and more of an overhang on shares.
