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Credit: Disney/Inside the MagicDisney is being quietly taken over by a mega-rich activist investment firm, and all signs indicate that the plan is to force fans and subscribers to pay more and sign up for services they don’t need.
Disney CEO Bob Iger recently released the company’s annual earnings report, basically showing off the House of Mouse’s financial books for all the world to see. While the company did shockingly well in terms of Disney Parks income (largely by jacking up prices for Guests), the report also demonstrated that the company is losing hundreds of millions of dollars a year on the Disney+ streaming service alone.
Combined with a series of high-profile theatrical flops and plenty of political turmoil, it seems the time is right for a powerful activist group to seize a huge stake in the Walt Disney Company and attempt to control the famed company.
Related: Billionaire Wants To Buy Disney, Says Bob Iger “Is Not Ready”
Disney+ and Bob Iger
The company’s biggest financial liability is also, ironically, one of its best-selling points. The Disney+ streaming service was launched in 2019 to huge fanfare and signed up millions of subscribers around the world, swiftly becoming a real threat to the dominant Netflix.
Fast-forward a few years, and Disney+ has raised its price multiple times in the last few months alone, abruptly deleted classic and original content, and is losing tens of millions of subscribers in India, the world’s largest market for streaming. It’s losing hand over fist, and yet Bob Iger is making Disney+, Hulu, and ESPN+ the future of the company and betting everything on combining them into a single app, which will likely be far more expensive than any other streaming service in the world.
Unsurprisingly, this is not going over well with activist investor groups.
Trian and ValueAct Capital
We have reported recently that Disney is facing a takeover via proxy battle from Trian and its founder, Nelson Peltz. Trian is an enormously wealthy investment company known for essentially forcing its way onto the board of directors of companies and using a huge shareholder stake to force the company into doing what it wants.
The company managed to survive a takeover attempt from the activist investor group Trian earlier this year, but now the firm is back, this time with the backing of ousted Marvel chairman Ike Perlmutter, one of the single largest shareholders in the entire company.
At the same time, Activist Spotlight (via CNBC) has discovered that another activist investor group, ValueAct Capital, has been quietly buying up a huge amount of Mouse stock and now has a stake in the company that likely rivals the combination of Trian and Perlmutter.
Disney is now facing two enormously wealthy firms, both of which are clearly intending to amass enough Disney stock to take over the future direction of the company.
Disney Fans vs Shareholders
While Trian is notorious for doing exactly what it is attempting to do with Disney and forcing its way into board seats, ValueAct Capital largely has the reputation of working collaboratively with the companies in which it purchases a significant stake.
Those companies include Microsoft, Salesforce, Spotify, and the New York Times, all of whom have seen their stock prices rise significantly under the influence of ValueAct Capital.
Related: Bob Iger Reportedly “Overwhelmed” and “Exhausted” by Disney Chaos, Insiders Say
However, don’t let that make you think it will be great for everyone. In large part, the activist group has improved shareholder value (and, naturally, made a lot of money for itself) by encouraging companies to create customer bundles and price tiers, plus advertising stacking.
It is nearly certain that, under the influence of ValueAct Capital, Disney will attempt to force subscribers into purchasing unwanted bundles and adding more advertising, exactly what most people do not want from streaming services. If you want to subscribe to Disney+, you’ll have to get Hulu and ESPN+, and likely, more as time goes on.
At this point, we’ll have to wait and see whether Trian or ValueAct Capital manages to seize majority control over Disney, but it’s unlikely to be beneficial to the company’s customers either way.
Should investment firms be allowed to swoop in and control companies like this? Give us your thoughts in the comments below!