Disney Board Shake-Up Raises Questions About the Future of Disney Plus

Not too long after Bob Iger somehow returned as Disney CEO and Bob Chapek and Kareem Daniel were ousted from their positions, the company has seen another unexpected corporate upheaval as Chairwoman of the Board Susan Arnold will be stepping down from her position, which Nike's Mark Parker is now expected to fill. Meanwhile, another challenger seeks to position himself to take a seat on the Board of Directors out of the belief that Disney Plus is not where it needs to be to truly thrive.



The Hollywood Reporter has indicated that Arnold, who has been in her current position since Iger's previous exit from Disney, will be stepping down ahead of the company's next annual report. The House of Mouse alleges that this exit was planned due to Arnold serving 15 years in her role, paving the way for Parker to step in and take over. Iger had the following to say about Parker's arrival and Arnold's departure:

Parker is set to lead the charge on a 'succession planning' committee which will pave the way for Iger's expected second exit late next year. However, this shake-up isn't the only change that may be on the horizon. Nelson Peltz from Trian Partners is seeking a place at the Board of Directors through a proxy fight, and he's specifically expressing concerns about the status of Disney Plus. In Peltz's eyes, Disney's current challenges are 'self-inflicted', with his key argument being that they 'failed to effectively communicate the financial rationale behind the strategic pivot' from commitments to traditional businesses -- like theatrical and parks -- to streaming. In Peltz's eyes, 'efficiencies and additional profits' are being left on the table, and he believes that he can make the changes needed to give the company a more profitable streaming presence.



Peltz indicated that unit economics for Disney Plus are lagging behind Netflix, with brands such as Star Wars being important to the service, but below where they could be relative to a massive streaming platform that has few signature IPs that it can truly call its own. Peltz noted that his proposed solutions would not be to spin-off existing Disney assets, but instead grow the potential of the existing Disney Plus and the company's other affiliated streaming platforms. So far, Disney has encouraged voting against approving Peltz's proposal, with the company issuing the following statement:

Deadline provides additional context to Peltz, noting that while he has a list of demands, he appears to be willing to cooperate with Disney's existing management instead of trying to usurp it. That being said, Peltz's stock market-focused approach to running the company might put Parker's new position in a bind, although this report indicates that there is some consideration from the shareholders to consider his propositions. Peltz previously was a critic of Disney's $71.3B acquisition of 21st Century Fox in 2019, which he seems to believe is a hurdle that the merged company must overcome, and streaming is notoriously a business that requires a lot of investment. Some believe that Peltz's skills in consumer products may help with a role in the company, and he especially seems to be interested on the parks front, which is where those skills may come in handy.



On the other hand, Peltz comes from a background of splitting companies for parts to satisfy Wall Street. Peltz notoriously oversaw the dismantling of General Electric, and may seek to similarly split the Disney conglomerate up to create a leaner iteration of the company, which has been counterintuitive to the mergers and acquisitions-heavy strategy that Bob Iger built. Iger's approach has been one meant to satisfy both existing creatives and those focused on Wall Street, and his successor/predecessor Bob Chapek made the mistake of favoring one over the other... Leading to his surprise ousting late last year. Peltz has a tough road ahead if he wants a seat at Disney's table, but he is well-known for being persistent when he sets his eyes on something -- and that something just so happens to be the Happiest Place on Earth.



Meanwhile, Matthew Belloni of Puck News is presenting a counter-narrative, indicating that a number of Disney's recent strategies, with and without Iger, are signaling that the company will ultimately hard-pass on what Peltz is offering. Moreover, they want the company's successor, whenever he or she is handed the torch when Iger goes back to retirement, to follow in his footsteps as opposed to reinventing the wheel. The piece is overall skeptical that Peltz's push will gain traction, but admits it is possible if the investors push for it. Belloni had more thoughts to share on CNBC:



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Overall, it appears that streaming and reducing debt is a key focus on this proxy battle, and this corporate conflict may ultimately end up affecting certain projects in the process. Should Peltz get the position, it may be deeply concerning for the future of certain projects on Disney Plus, and Star Wars especially, while the more profitable ventures on the service might be able to continue as planned. We'll be sure to watch this space and pay attention to whether or not big business gets in the way of the future of the galaxy far, far away.



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