CALIFORNIA – Disney is facing rare business criticism from a high-profile investor: it is squeezing money out of its theme park guests.
The company’s reliance on rising ticket prices and other fees to fuel growth is “unsustainable,” according to Trian Partners CEO Nelson Peltz.
He commented on a presentation at the media conglomerate advocating for change.
He was also worried that Disney’s streaming business was losing money and that people were talking about how poorly paid employees were.
“Disney may assume that raising prices and ‘nickel-and-diming’ cast members and other charges is beneficial to the bottom line,” he argues. “However, we assume short-term thinking jeopardizes the brand’s value and the business’s long-term health.”
Disney Nickle And Diming
“Nickel-and-diming” is a phrase used in the United States to describe financially harming someone by making many tiny charges or pay cuts.
Disney has been contacted for comment.
According to Trian Partners, which has built up a 0.5% stake in Disney worth $900 million, the business recently announced that it would scale back some of the price increases at its theme parks, where spending per visitor has increased over 40% since 2019.
The rises come when the economy is experiencing widespread price inflation. In recent years, employees at Disney parks have also routinely petitioned for increased compensation.
Mr. Peltz is a well-known activist investor who has gone up against big companies like Wendy’s and Procter & Gamble, which make things like Pampers and Vick’s.
Company In Crisis
In his presentation, he claims that Disney is in a “crisis” and that many of its problems are self-inflicted.
He says the company overpaid for most of Rupert Murdoch’s Fox empire and gave CEO Bob Iger “over-the-top” pay packages. Iger was recently brought back to his job.
He also expresses concern about Disney’s streaming strategy, which has incurred significant losses.
Trian Partners asked the company’s shareholders for permission to get a seat on the board of directors after Disney turned down the request. The company claims it has no intention of deposing Mr. Iger, who is well respected.
Expectant Growth in 2022
Disney has said that after the first phase of growth, it focuses on the bottom line of its streaming business.
It expects the company to become profitable in the fiscal year 2024.
The Disney share price has plummeted in the previous year, and it has also come under fire from another activist investor, Third Point Capital, which has urged the company to spin off its cable sports channel ESPN.
SOURCE – (BBC)
