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Saturday 9 March 2024
Saved Again: Netflix Acquires Rights To The 2019 Season Of The Bold And The Beautiful For Fans Across South Africa
Tuesday 5 March 2024
Nelson Releases White Paper Proposing Several Restructuring On Disney Including Less Sequels And A Downsizing Of Disney+ Global
Nelson Peltz‘s Trian Partners, which is agitating to get two seats on Disney’s board, on Monday released a lengthy white paper analyzing the Mouse House’s financial performance — and suggesting strategic fixes.
The recommendations, according to Trian, are aimed at turning around Disney‘s total shareholder returns, which have trailed most of its peers (except Warner Bros. Discovery and Paramount Global), according to the white paper. Trian is urging Disney shareholders to vote for its two board nominees — Peltz and ex-Disney CFO Jay Rasulo — at the company’s April 3 shareholder meeting. Disney opposes the candidates put forward by Trian and another activist firm, Blackwells, as lacking “the appropriate range of talent, skill, perspective and/or expertise.”
“For more than a year, Trian has described its thoughts on strategies and goals, some of which Disney has now implemented, such as reducing excess costs, reinstating a dividend, and making the Parks business a bigger part of Disney’s growth strategy,” the Peltz-run firm says in the white paper. “We are now making our 100+ page presentation public with our comprehensive views.”
Among the proposals in the 133-page white paper (available at this link), the hedge fund says that to achieve a better return on its streaming content, Disney should take more “shots on goal” and increase creative risks outside of its core franchises, similar to Netflix. The company, Trian says, should “explore allocating more budget dollars across lower-cost, easier-to-produce projects to further balance Disney’s higher-cost franchise content; prioritizing ‘retention’ content spend should diversify away the risk of expensive streaming flops.”
Trian also recommends that Disney make fewer movie sequels. “Disney’s ‘flywheel’ spins the fastest when the company creates or acquires new intellectual property to monetize,” the white paper says. “Sequels are less risky film ventures to produce, but do not drive long-term benefits in the same way that new IP can.”
The firm continues, “The percentage of Disney films that are sequels, prequels, spin-offs or remakes has dramatically increased — suggesting a creative engine that is sputtering.” Trian is calling for “a comprehensive review of studio operations and culture” by the board, including the state of leadership, process and workflow.
Meanwhile, Trian recommends two potential paths for ESPN: One, that ESPN’s standalone streaming service, which Disney is aiming to debut by the fall of 2025, be launched “ideally with a ‘bundle’ partner like Netflix or Amazon”; or two, that ESPN should “harvest cash out of its linear business to selectively reinvest in ESPN+ and higher growth parts of Disney’s business (such as Disney+).”
Elsewhere, Trian suggests merging Disney+ and Hulu product and content organizations to cut costs — a move it claims would create cost efficiencies in the neighborhood of $1 billion. Disney is in the process of buying out NBCUniversal’s 33% stake in Hulu. In November, Disney said it would pay at least $8.61 billion to Comcast for the Hulu stake, with the final price tag — which could be higher — to be based on an assessment of Hulu’s market value by each parties’ bankers.
As it relates to the integration of Hulu content on Disney+, Trian believes the service should “phase out the Hulu tile.” “We are skeptical that keeping Disney’s best general entertainment content behind a Hulu tile optimizes user engagement,” the white paper opines.
In addition, Trian says it believes Hulu + Live TV “is a loss-leading product that has struggled to scale and adds limited strategic value.” Per the white paper, “In our view, Live is not competitively positioned compared to YouTube TV following its deal to secure NFL Sunday Ticket and is no longer positioned as a ‘low-cost alternative to cable.’”
Other suggestions in the white paper aren’t new. For example, Peltz wants Disney to achieve “Netflix-like” streaming margins of 15%-20% by 2027, something the hedge fund has previously outlined. Trian also wants to see Disney’s board “fix” its “chronic succession problems” for CEO Bob Iger, whose contract expires at the end of 2026.
Much of Trian’s white paper dwells on making the case for change on Disney’s board. For example, the hedge fund argues that Disney’s $71 billion deal for 21st Century Fox, which closed in 2019, was “strategically flawed”: “We are skeptical that Disney has delivered on its targeted synergies and EPS accretion given the deterioration of Disney’s media earnings power following the acquisition.”
The Disney/Fox deal was “arguably the result of misaligned incentives,” Trian’s white paper says. “On the same day that Disney agreed to acquire Fox, the board extended Mr. Iger’s employment agreement by four years and awarded him an ‘over-the-top’ compensation package, reasoning that doing so was ‘critical’ to driving long-term value from the acquisition,” the paper says. “In our view, the prospect of a much larger compensation package (more than double his previous package) created a strong financial incentive for Mr. Iger to pursue the Fox deal regardless of its prospects, creating a significant conflict of interest.”
Here are Trian’s agenda items for the Disney board from the white paper, divided into four categories:
Enhance Corporate Governance & Accountability
Refresh the board by adding Nelson Peltz and Jay Rasulo as independent, aligned, and focused Directors
Fix succession process and run a thorough and successful search for a CEO in time for Mr. Iger’s 2026 retirement
Align pay with performance by tying the compensation program to outcomes that drive long-term shareholder value
Form a board-level finance & strategy committee to evaluate progress on recommended initiatives and improve the Board’s monitoring of Disney’s long-term strategy
Accelerate Media Profitability
Insist management develop and articulate a clear DTC strategy with tangible goals that will achieve Netflix-like margins of 15-20% by 2027
Explore opportunities to improve DTC engagement and cost structure, including changes to product and marketing strategies and reducing redundant overhead costs
Right-size legacy media business cost structure in light of industry dynamics
Evaluate Disney’s organizational structure to improve accountability and efficiency
Review of Creative Engine
Initiate a comprehensive Board-led review of studio operations and culture, including leadership, processes and workflow
Prioritize new intellectual property to reignite the “flywheel” and drive Disney’s long-term growth
Explore additional opportunities to enhance the “flywheel” with digital cross-promotion
Clarify Strategic Focus
Issue long-term free cash flow growth target beyond FY 2024 to anchor investors on a clear strategic vision and enhance accountability
Explore strategic partnership(s) for non-core linear assets – benefits include an enhanced focus on linear assets, a preserved strategic alignment with Disney’s DTC business, and an improved growth profile for Disney
Insist on a digital strategy for ESPN that has a clear path to attractive financial returns
Refine parks strategy to include tangible return targets on the $60bn of Parks capex, plans to address new competitive threats to Walt Disney World, and a commitment to improving the guest experience at domestic parks
Sunday 3 March 2024
Could Netflix Become The Exclusive/Future Home Of Nickelodeon?
Thursday 29 February 2024
Why eToonz Now Offers Shows Like MasterChef Junior?
Saturday 24 February 2024
Popeye: The Origin Story Of Frank ‘Rocky’ Fiegel
Friday 23 February 2024
Why Yu-Gi-Oh Is Getting A Lot Of Backlash On SABC 2?
Sunday 18 February 2024
Chicken From Outer Space | Courage The Cowardly Dog | Cartoon Network
Could Merit Street Media Also Be Eyeing International Expansion?
Development Alert: Ben 10 Omniverse Had A 9th And 10th Season In Development, Lucky Girl Prequel Series Cancelled
Saturday 17 February 2024
Why MultiChoice Has Been Removing A Lot Of Local/African Channels On DStv And GOtv In Recent Months?
Saturday 10 February 2024
Goblins Of Litter | Before Courage | Courage The Cowardly Dog | Cartoon Network
Before Courage was a scrapped prequel revival series to the Cartoon Network series, Courage the Cowardly Dog initially made for release on the Boomerang channel. Although development for the series' pilot began in late 2018, it was later shelved due to the management team at Cartoon Network prioritizing their focus to other properties.
In October 2018, Dilworth commented on a Facebook post that he was in negotiations with Boomerang for a prequel to the series. Later that month, Dilworth announced on Facebook that development on a "potential prequel" to Courage for Boomerang was expected to begin.[1] However, in May 2020, when asked about the project, Dilworth responded that it had been "transformed into another thing". Albeit not confirmed, it could be presumed that he may have referred to the Scooby Doo crossover, Straight Outta Nowhere: Scooby-Doo! Meets Courage the Cowardly Dog.
In June 2021, Dilworth revealed that the project was on turnaround as Cartoon Network's management is prioritizing their focus on other projects. In January 2022, Dilworth revealed that the project has already been dropped and fell through for the same reason.
In February 2024, Dilworth posted the animatic pilot for the series, titled "Goblins of Litter", onto his YouTube channel.