Disney’s investors were delighted by the restructuring plans announced in its quarterly earnings call—and activist investor Nelson Peltz dropped his proxy battle with the entertainment giant.
- The Disney Corporation released its first-quarter earnings call on Wednesday, February 8.
- Despite losing 2.4 million Disney+ subscribers and announcing 7,000 layoffs, the call was very well received by investors who enjoyed news that returning CEO Bob Iger would be restructuring the company, cutting $5.5 billion in costs, and returning money to shareholders.
- Losses coming from the streaming business have hurt, and Iger says it will be approached more “judiciously” as the company makes significant cuts. He did call streaming “the future.”
- The company noted an 8% quarterly increase in revenue despite a 4% drop in subscribers, The Wrap notes.
- Disney’s stocks rallied 4.1% on Thursday with the opening of the stock market.
- The company also announced sequels for some of its most successful recent animated films—Frozen 3, Toy Story 5, Inside Out 2, and Zootopia 2.
Why It’s Important
There is much on the line for the company that currently owns more than a fourth of the global film industry. Following a year of diminishing revenue, Disney+ subscriptions stalling, and culture war battles with the state of Florida, investors were eager to learn Iger’s plans to reinvigorate the company and make it profitable again. And they were happy with what they heard.
As it stands, the company is still facing an active leadership crisis. The previous CEO Bob Chapek was drummed out of the company in November by the board of directors and replaced by his long-time predecessor in the hopes that Iger would turn the company around. Iger only plans to stay on for two years.
Subsequently, the board faced a proxy war battle with activist investor Nelson Peltz, who attempted to force his way onto the board of directors. As of Thursday though, the proxy war is over. Peltz changed his tune in a CNBC interview and reveal that he was happy with the direction of the company following the investor call. “Now Disney plans to do everything we wanted them to do. We wish the best to Bob, this management team, and the board. We will be watching. We will be rooting,” Peltz says.
“After a solid first quarter, we are embarking on a significant transformation, one that will maximize the potential of our world-class creative teams and our unparalleled brands and franchises. We believe the work we are doing to reshape our company around creativity while reducing expenses will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders,” says Iger.