Investors’ appetite for savvy corporatism has its limits and usually starts with a falling stock price. Check out what’s going on at Disney for more proof.
For years, the “House of Mouse” was the epicenter of political correctness. Investors largely ignored this circus (including a same-sex kissing scene on children’s shows) as Disney stock soared.
No longer. After longtime CEO Bob Iger retired in 2020, successor Bob Chapek proved a far less adept manager and pick-me-up. Closing pandemic theme parks didn’t help. He was also struck down by Florida Gov. Ron DeSantis for opposing a law preventing schools from teaching sex education to 6-year-olds and losing Disney’s special tax status.
Much of his programming turned out to be duds and his streaming strategy failed. Disney’s stock plummeted so badly that Chapek was shown the door after only about two years on the job.
Iger, 71, returned to the right aisle and suffered even more. Its stock has largely flattened out as costs have risen and streaming remains in limbo, impacting revenue and profits.
A duo of nervous activist investors are now circling the company like vultures. Dan Loeb’s Third Point and Nelson Peltz’s Trian Partners are unlike passive fund managers in that they use their ownership positions to advocate for changes that they believe will immediately result in a higher stock price, damn it the current one Management.
Nelson Peltz is reportedly trying to encourage more cuts to boost Disney’s stock prices, AP
Both have big stakes in Disney, and first off, both want Iger to focus less on programs that appeal to AOC and more on things that appeal to Central America. They want a coherent streaming strategy, cost reductions, and more.
Peltz in particular should make Disney and Iger ponder. He preaches “constructive engagement” with companies he targets, but he’s a longtime critic of Iger and has a significant $940 million stake in the stock, which he’s likely to up as he focuses on the war prepared. In the meantime, check out what he did at GE: He windowed CEO Jeff Immelt just two years after buying shares because he believed Immelt couldn’t make his numbers and the stock was teetering.
For the same reason, Immelt’s successor left about a year later. The current management installed by Peltz is in the process of dismantling one of the largest conglomerates in US history.
Okay, so Peltz often gets his way and isn’t exactly known for his patience when his money is wasted like at GE. A board fight for the ages is now certain after Peltz demanded a seat on the board and Iger told him to hit sand. Iger is upping the ante, I’m told, by filing a preliminary power of attorney to explain why he believes Peltz is unqualified for the seat.
So far, Peltz says he doesn’t want to break up and dissolve Disney, and Iger may stay on as CEO for the next two years. But based on his story, Peltz won’t stand for stiff arm unless Disney’s stock starts moving higher and faster.
That could mean, in addition to everything else on Peltz’s wish list, divesting Disney’s so-called “non-core assets” to boost profits. Bankers tell me that selling Disney’s sports cable network ESPN, and perhaps the entire ABC television network, is on the table and is a real way to satisfy Peltz’s desire for a higher share price.
Also, Iger’s job is certainly on the table if he doesn’t make his numbers.
DJ Solly’s last dance?
Goldman Sachs’ top partners want to oust David Solomon as CEO and could leak information to embarrass the company’s board of directors to pressure his ouster. AFP via Getty Images
Never before has such a well-telegraphed, fairly routine round of layoffs caused such a stir on Wall Street. But it seems nothing goes quietly when David Solomon’s fingerprints are on it.
Solomon, as this column has pointed out, is the ailing CEO of Goldman Sachs. He’s a polarizing figure within the prestigious investment bank — and that goes beyond his internally controversial sideline as a DJ during the summer Hamptons party scene.
A contingent of top partners want rid of him, and they might prevail if they can leak enough bad stuff to embarrass the Goldman board into making a change.
Just as Solomon was about to announce a barely draconian roughly 6% cull of his staff (dubbed “David’s Demolition Day”), The Post’s Lydia Moynihan reported that Solomon ended Goldman’s free coffee perk in cold blood.
It will take more than a few leaks to be able to Solomon, but they are symptoms of a weak management hand. And they can ultimately be deadly in a place like Goldman with its Game of Thrones management upheavals.
Goldman’s culture is one of constant power struggles between traders and investment bankers. When one side controls the balance sheet and the other is in power, change is not far away.
Remember how trader Jon Corzine (a future New Jersey Senator and Governor) was replaced at the helm after a banking coup led by senior banker Hank Paulson (a future Treasury Secretary). Dealers Lloyd Blankfein and Gary Cohn dumped Paulson & Co. as trading profits soared; Solomon, a longtime banker, pushed Blankfein out during a deal boom.
Solomon now finds himself amid higher trading earnings, a slowdown in business and the near-collapse of his foray into retail banking amid the Goldman CEO dance. There are a few ways out for him: pray for more deals and fast (difficult). Or finally find a merger partner that I’m told is just waiting to grab when assets go down.
The right merger (with Goldman as the official acquirer) will likely keep Solomon in his job for as long as he wants.