Disney is facing criticism from a high-profile investor that’s unusual in the business world: for squeezing money out of its theme park customers.
The company’s reliance on raising ticket prices and other levies to fuel growth is “unsustainable,” says Trian Partners CEO Nelson Peltz.
He made the claim in a presentation calling for changes at the media giant.
He also raised concerns about losses in Disney’s streaming business and public complaints about low employee pay.
“Disney might believe that price hikes and ‘nickel and diming’ cast members and other costs are good for the bottom line,” he says. “However, we suspect that short-term thinking threatens brand equity and the long-term health of the company.”
“Nickel-and-diming” is a US term meaning to financially harm someone by making a large number of small charges or payment cuts.
Disney has been contacted for comment.
The company recently said it would roll back some of the rate hikes at its theme parks, where spending per person has risen nearly 40% since 2019, according to Trian Partners, which owns a 0.5% stake in Disney worth $900 million. dollars built up.
The increases came at a time of widespread price inflation across the economy. Disney park employees have also repeatedly protested for higher wages in recent years.
Mr. Peltz is an activist investor known for struggles with big companies like fast-food chain Wendy’s and Procter & Gamble, makers of brands like Pampers and Vick’s.
In the presentation, he says Disney is in a “crisis” and that many of the challenges it is facing are of its own making.
He says the company overpaid to buy the bulk of Rupert Murdoch’s Fox empire and gave “excessive” compensation packages to CEO Bob Iger, who was recently reinstated as CEO.
He also raises concerns about the strategy for Disney’s streaming business, which has reported big losses.
Trian Partners is seeking shareholder support for a seat on the company’s board after Disney rejected the application. The company says it’s not trying to oust Mr. Iger, who is widely popular.
Disney has previously said that after an initial period of growth, it is focused on bottom line in its streaming business.
It expects the business to become profitable in fiscal 2024.
The company, whose share price has plummeted over the past year, has also been targeted by another activist investor, Third Point Capital, which has been pushing the company to spin off its cable sports channel ESPN.
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