Disney CEO Bob Iger said on Thursday that succession is the board’s top priority, a password-sharing crackdown is coming in the summer, and rejected the notion that the proxy fight with activist shareholder Nelson Peltz drove up the share price.
Speaking in a television interview on CNBC the executive reflected on the lessons of the protracted proxy fight, which ended yesterday in a “decisive” vote of confidence in Iger’s leadership as shareholders elected all 12 of Disney’s board nominees.
According to reports close to 75% of retail or individual shareholders – a group which makes up around 40% of all Disney shareholders – backed the company, while Peltz received some 31%. Iger received 94% of the vote to remain on the board.
Iger called the vote “an endorsement”, adding, “If anything came of this that’s positive [it] is that it did in fact increase the engagement with shareholders, and that’s a very good thing.”
The CEO continued, “Clearly shareholders are interested and care very much about succession. It is the board’s number one priority.”
A succession committee led by board chairman and Nike executive chairman Mark Parker met seven times last year and Iger said it intends to meet more frequently this year, but did not elaborate. “They’re confident they will choose the right person at the right time.”
He pushed back on the claim floated by Trian Partners co-founder Peltz that the proxy fight helped focus minds and pushed up Disney’s stock, which has climbed 34% since January 1 but has tumbled 40% since March 2021 when it reached $197.16.
“The market is reacting to how this company is performing; it was not reacting to the [proxy] fight… “If anything it was distracting.”
At time of writing the share price stood at $118 and market cap was $216.9bn.
Iger said since his return as CEO in November 2022 he had been devising and starting to implement growth strategy in alignment with the board.
He was bullish on streaming, reminding that since launching in 2019 Disney+ is expected to reach profitability by the fourth quarter of this year. Losses have been slashed from around $4bn a year in late 2022 to $130m per the last earnings report in February.
“That’s a huge improvement and we know exactly how we delivered that improvement,” he said. “Now we have to turn it not just into a profitable business but into a growth business.”
The company will reach double-digit margins on the streaming business “eventually”, he said, in reference to a prior assertion by Peltz that the activist investor would target 15-20%, although the latter had not provided specifics.
Iger noted that the company had just launched Hulu on Disney+ and the beta stage ended last Friday (March 26). He also highlighted the need to reduce churn and marketing costs.
“We need to programme more smartly,” he said, “particularly outside the United States, which is to pick the markets where we can really move the needle and programmes with really strong local programming. We’ve had some success there; we need more success.
A password-sharing crackdown will start this summer. “In June we’ll be launching our first real foray into password sharing,” said Iger. “Just a few countries, and then it will grow significantly with a full roll-out in September.”
Asked how he felt ranking second in global streaming subscribers behind Netflix the CEO replied, “Netflix is the gold standard in streaming… If we could accomplish what they’ve accomplished, that would be great.”
Disney most recently reported 111.3m members excluding Disney+ Hotstar in February’s Q1 earnings, after Netflix reported 260.3m in its Q4 report in January.
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