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Disney's biggest shareholder fight in 20 years will shape the company's future

Meg James, Los Angeles Times on

Published in Business News

Wednesday's shareholders meeting, which will be held virtually, is expected to be a stark departure from the lovefest of a few years ago when Disney largely celebrated the prowess of the Mouse House, which towered over the rest of the industry.

Disney has not fully recovered from COVID-19 pandemic shut-downs, which dealt a devastating blow. And some of Disney's problems can be traced to decisions made years earlier, including its attempt to quickly pivot to streaming and purchase much of Rupert Murdoch's entertainment assets. That 2019 acquisition left Disney deeply in debt.

The linear television business, including ESPN, has declined at a faster-than-expected rate, eroding a key profit center. Major movies, including "The Marvels" and "Indiana Jones and the Dial of Destiny" were big disappointments. "Haunted Mansion" was a flop.

"There's definitely a bit of fatigue coming from the audience out there," said Brian Mulberry, a portfolio manager at Zacks Investment Management. "We just haven't really seen a whole lot of new and attractive coming from Disney."

Iger has since acknowledged that Disney's studio "lost some focus," and that the push for more movies, in some cases, led to diminished quality.

Another sore point among critics has been Disney's promotion of social messages. The company also became ensnared in a two-year fight with Florida's Gov. Ron DeSantis after protesting the Sunshine State's so-called "Don't Say Gay" law that restricts discussions about sexual orientation and gender identify in public schools.

 

Ratings company Egan-Jones last week threw its support to Peltz and Rasulo, blasting Disney for what it said was "the unnecessary and extremely dangerous entrance ... into the killing fields of the culture wars."

Peltz, in an interview with the Financial Times, seemed to disparage Disney's more diverse movie and casting choices, including the box-office bomb "The Marvels" and even the blockbuster "Black Panther," reportedly asking: "Why do I need an all-Black cast?"

Mulberry, the Zacks portfolio manager, noted "there's certainly a lot of value in having diverse opinions and diverse representation."

"But if you create content that either lectures or scolds consumers about a particular point of view, well, that hasn't worked," Mulberry said. "You need to be a little bit more in tune with the audience."

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