The Walt Disney Company said Wednesday it had secured backing from ValueAct Capital, a prominent activist hedge fund, as it faces a board challenge from billionaire financier Nelson Peltz.
The news underscores how many activist investors are buying Disney stock as the media giant faces numerous business challenges, including a stagnant stock price; concerns about its strategies for streaming, television networks and film productions; and questions about your succession planning.
Beyond Peltz, who is seeking two board seats, and ValueAct, other hedge funds seeking changes at Disney include Blackwells Capital, a hedge fund that announced Wednesday it was seeking three seats on the company’s board. .
In a statement, Disney said ValueAct would support the company’s director candidates at its annual shareholder meeting. In exchange, the company will enter into an agreement to consult with the $16 billion hedge fund, including through meetings with the board of directors.
“ValueAct Capital has a history of collaboration and cooperation with the companies in which it invests,” said Robert A. Iger, CEO of Disney. “We appreciate your contributions as long-term shareholders.”
Mason Morfit, co-CEO of ValueAct, added: “As legacy technologies transition to digital platforms, we believe Disney can lead the media industry forward. “We couldn’t be more excited to partner with Bob and the board of directors to help create long-term sustainable value for shareholders.”
The deal is Disney’s latest move to appease restless investors. In November, it added two new directors: James P. Gorman, chief executive of Morgan Stanley, and Jeremy Darroch, former chief executive of British broadcaster Sky.
ValueAct’s stake in Disney is believed to be substantially smaller than the 33 million shares Peltz controls. But the firm is highly regarded on Wall Street as a constructive collaborator with corporate boards. Reaching an agreement with the company eliminates a potential headache for Disney.
It’s unclear what it would take to negotiate peace with Peltz, who has become a partner with Ike Perlmutter, the irascible former president of Marvel Entertainment, and Jay Rasulo, a former Disney chief financial officer who left after being passed over as Mr. Iger’s heir apparent. Peltz has pushed for cost cuts, a revamped streaming strategy and a clearer succession plan.
But while some shareholders have backed Peltz’s efforts, including hedge fund Ancora Holdings, others appear unfazed. Among them is Blackwells, which said its three board candidates would back Iger and called on Peltz “to end his preening so Disney can focus on its bright future and not be dragged back in time.”
