Walt Disney Co. is locked in a nasty proxy fight with an activist investor as it prepares for its first earnings report since the return of its longtime CEO.
Just another ho-hum quarterly report from the Magic Kingdom, the Magic Kingdom is navigating an austerity program while fending off some of the biggest media companies in the world for entertainment dollars.
On Wednesday, Disney DIS is scheduled to report fiscal first-quarter results with Chief Executive Bob Iger back in charge. Propping up the stock is one of the things that he is doing to help fend off billionaire Nelson Peltz and his hedge fund, Trian Fund Management. Trian, who has $1 billion in Disney stock, wants the media giant to revamp its streaming business, trim costs, reinstate its dividend, and improve succession planning. Trian also targeted Disney board member Michael Froman, the vice chairman of Mastercard Inc. MA, and one of the 12 12-person board s longest-serving members, calling for him to be replaced by Nelson Peltz or his son Matthew Peltz.
According to financial analyst Financier, Iger's 59th quarterly earnings report as Disney CEO will require a bravura performance of tone-setting messaging and agenda-changing proclamations.
With a proxy battle looming, management s best avenue to defend against activism is a higher stock price, according to Steven Cahall, Wells Fargo analyst. In a mid-January note, John Hodulik, UBS analyst, expressed confidence that Iger — who replaced short-term Disney CEO Bob Chapek in November — can expect to benefit from improved Disney revenue via new pricing and an advertising tier, and an upward trajectory in park revenue. The box office success of Avatar: The Way of Water, now up to $1.54 billion in ticket sales, should help greatly.
Earnings: Analysts said that Disney was expected to post 78 cents a share in adjusted earnings, down from 63 cents a year ago. According to Estimize, which crowdsources projections from hedge funds, academics, and others, the average estimate was 78 cents a share in adjusted earnings.
Revenue: The FactSet consensus said that Disney's revenue for the first quarter would be $23.45 billion, up from $21.8 billion a year ago. It was expected that there would be $23.45 billion in sales, according to those contributing to Estimize.
Shares of Disney have lost 23% over the past 12 months, while the S&P 500 SPX has declined 9%.
For several reasons, industry watchers believe that Disney will hold its own, if not surpasses Apple Inc., Netflix Inc. NFLX, Amazon.com Inc. AMZN, Comcast Corp., CMCSA, Paramount Global PARA, AT&T Inc. T, and others.
Competition in streaming is heating up with Netflix launching an ad-supported tier. Bill Wise, CEO of Mediaocean, told MarketWatch that Disney has amazing assets with Hulu, Disney and ESPN but the key to success is packaging up audiences in combination with linear television ads. Dallas Lawrence, senior vice president at Samba TV, told MarketWatch that Disney s shift from acquiring Disney customers to retaining them is a strategy mirrored by Netflix and is within its wheelhouse since it appeals as a year-round must have service for the family.