Disney Posts Robust Earnings Ahead of CEO Bob Iger’s Showdown with Peltz

Disney's Fiscal Success and CEO Iger's Stand Against Proxy Challenges

Feb 8, 2024 - 09:04
Feb 8, 2024 - 09:04
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Disney Posts Robust Earnings Ahead of CEO Bob Iger’s Showdown with Peltz
Disney Posts Robust Earnings Ahead of CEO Bob Iger’s Showdown with Peltz

Walt Disney Co. has released its fiscal first-quarter earnings report, surpassing analysts' expectations and offering a positive profit forecast for the year. The earnings per share reached $1.22, excluding certain items, exceeding the Wall Street consensus of 99 cents.

Although revenue remained stagnant at $23.5 billion for the period ending Dec. 30, slightly below the Bloomberg estimate of $23.8 billion, Disney's profit outlook for the year signals a promising trajectory. The company anticipates a profit increase of at least 20% to approximately $4.60 per share, exceeding analysts' projections of $4.27.

The strong financial results provide CEO Bob Iger with leverage as the company faces potential proxy challenges at its upcoming shareholder meeting. Trian Fund Management LP, which has nominated founder Nelson Peltz and former Disney finance chief Jay Rasulo to Disney's board, poses a formidable challenge.

To bolster investor confidence, Disney has announced a 50% increase in its dividend to 45 cents per share and approved a $3 billion stock repurchase program for the year.

The positive earnings report has sparked a 7.8% surge in Disney's pre-market trading, marking the largest intraday gain since November. Additionally, Disney revealed plans to invest $1.5 billion in Epic Games Inc., signaling its commitment to strategic partnerships in the gaming industry.

While Disney+ subscriber numbers declined to 149.6 million in the quarter, streaming losses narrowed to $216 million from $1.05 billion a year ago. The company remains optimistic about adding 6 million core Disney+ subscribers this quarter and achieving streaming profitability by the fourth quarter of the fiscal year.

International parks emerged as a bright spot for Disney, reporting a significant profit increase and a 35% sales growth compared to the previous year. This growth offset modest performance from domestic parks, with revenue increasing by only 4% and attendance declining at Walt Disney World in Florida.

However, Disney's traditional media businesses continue to face challenges, with declining revenue from content sales and licensing, as well as a slump in domestic TV network sales. Despite these challenges, Disney announced plans to launch a new sports-focused streaming service in collaboration with Fox Corp. and Warner Bros. Discovery Inc.

Trian Fund Management LP's push for board representation underscores the ongoing tension between Disney and activist investors. While Trian dropped its effort to seek board seats last year, the recent proxy challenges signal renewed tensions as Disney navigates its strategic path forward.

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