Walt Disney's (DIS) $5.5 billion cost-cutting plan and better-than-expected quarterly results won over activist investor Nelson Peltz, who dropped his proxy fight for a seat on the entertainment giant's board on Thursday.
Disney said in its fiscal first-quarter report, released late Wednesday, that it will target annual savings of $3 billion in spending on content other than sports, as well as $2.5 billion in other expenses, which will require the company to cut 7,000 jobs.
- Activist investor Nelson Peltz dropped his bid for a seat on Walt Disney's board.
- Peltz endorsed Disney's new restructuring plan targeting $5.5 billion in annual savings.
- Disney plans to cut 7,000 jobs and save $3 billion in annual content costs.
- Recently returned CEO Bob Iger said he's open to selling Hulu but would keep ESPN as part of Disney.
"Now Disney plans to do everything we wanted them to do," Peltz said on CNBC.
The company's results, its first since the board fired Bob Chapek and brought back longtime CEO Bob Iger in November, also won praise from Wall Street analysts. Disney shares rose as much as 8% after-hours Wednesday, opening at a five-month high Thursday. The stock slipped 1.3% by the close amid a market selloff.
"The hard work is ahead, but substantive and specific cost savings suggest a sense of urgency to maximizing long-term returns,” said Morgan Stanley analysts.
Iger also made ESPN a standalone unit, quashing speculation that Disney's sports cable channels might be sold or spun off. "They separated it in order to let people know how well ESPN is doing," a Daiwa Capital Markets analyst told Yahoo Finance.
Iger also said Thursday he's open to selling the Hulu streaming service, which Disney co-owns in an uncomfortable partnership with rival Comcast (CMCSA). Comcast can require Disney to buy out its Hulu stake for a minimum of more than $9 billion in January 2024.
Iger said Wednesday he hopes to announce a dividend by the end of the year, albeit a "modest" one, after the company stopped paying dividends in 2020 amid the COVID-19 outbreak.
The unit that until now had included ESPN as well as ABC and other Disney television assets performed better than expected in the first quarter, overcoming weakness overseas to offset a $1 billion loss at the company's Disney+ streaming service. Theme parks remained Disney's best-performing business segment thanks to strong travel demand and rising visitor spending.