Disney cinematic drought primed Peltz proxy fight

Disney has struggled to return to 2019’s box office records – and that may have helped open the door to its recent troubles with activist Nelson Peltz.

Just four years ago, the studio owned seven billion-dollar films, contributing to a worldwide box office of more than $13.2 billion. Its studio entertainment segment posted revenue of $11.1 billion and operating profit of $2.69 billion that year.

More recently, the House of Mouse has seen those revenues fall below $9 billion in 2022 and 2023, as well as six straight quarters of operating losses within its content sales business, in which its divisions reside box office and home entertainment. A combination of pandemic-related shutdowns, two Hollywood strikes and a failure to connect with audiences led to a dark period for Disney’s theatrical business.

Aside from 2022’s “Avatar: The Way of Water,” which Disney acquired as part of its $71 billion deal for a majority of 21st Century Fox, the company hasn’t seen a film generate more revenue billion dollars since the last Star Wars films in 2019, according to Comscore data. Sony produced and distributed “Spider-Man: No Way Home,” which grossed $1.9 billion, although Disney’s Marvel Studios was a co-producer.

Disney is getting closer — with 2023’s “Guardians of the Galaxy: Vol. 3,” which has grossed nearly $900 million at the global box office, as well as 2022’s “Doctor Strange in the Multiverse of madness” ($955 million), “Black Panther: Wakanda Forever ($859 million) and “Thor: Love and Thunder” ($760 million).

Yet other big-budget franchise films have failed. “Indiana Jones and the Clock of Doom” grossed $378 million worldwide in 2023, “Ant-Man and the Wasp: Quantumania” earned $476 million worldwide, an unusually low figure for a Marvel film ( until “The Wonders” reached just over $200 million late last year) and Pixar’s “Lightning Flash” collected less than $250 million worldwide in 2022.

Disney’s recent box office struggles have become a key focus for Trian Fund Management as Peltz seeks a board seat for himself and former Disney CFO Jay Rasulo. Peltz criticized Disney’s board, saying it “lacks focus, alignment and accountability” and has failed to act because Disney’s profits, reputation and stock price the business suffered.

Disney shareholders will vote on board nominations at the company’s shareholder meeting Wednesday.

As part of Trian’s white paper, released in early March, the fund cited “Wish,” “Indiana Jones and the Dial of Destiny,” “Lightyear,” “The Marvels” and “Haunted Mansion” as examples of recent commercial disappointments for the studio.

“We are concerned about the current state of Disney Studios and creative processes across the portfolio,” the white paper reads.

Peltz himself has publicly questioned what he calls Disney’s “woke” content strategy. The company’s creative team has actively sought to create films and television shows centered around non-white and non-male characters, as well as exploring narratives outside of heteronormativity.

“People will watch a movie or a show to be entertained,” Peltz said in a recent interview with the Financial Times. “They’re not going to look for a message.”

In particular, he cited the Marvel films starring Black Panther, an African prince who becomes king, and Captain Marvel, a US Air Force pilot who gains extraordinary cosmic powers.

“Why do I have to have an all-female Marvel? Not that I have anything against women, but why do I have to do that? Why can’t I have Marvels that are both? Why do I- I need an all-black cast.? » he later said in the Financial Times interview.

The film “Black Panther” did not have an all-black cast and “Captain Marvel” and “The Marvels,” in which Captain Marvel is the central character, did not have an all-female cast.

Peltz’s comments echo those previously made by former Marvel Entertainment Chairman and CEO Ike Perlmutter, who was ousted from Disney last year and is a friend of Peltz and a supporter of his proxy fight.

Peltz has also been particularly at odds with Disney’s failed succession plans and what he described as a disjointed streaming strategy.

However, storytelling isn’t the only factor in Disney’s recent dismal box office performance.

During the pandemic, the company launched streaming animated films, and parents became accustomed to the idea, which hurt box office sales.

Disney has also diluted its Marvel brand with too many Disney+ spinoff series and theatrical sequels, according to CEO Bob Iger.

And to top it all off, Disney has had to contend with a rapidly changing consumer who needs more than just a nostalgic title to be lured off the couch and into the movies, especially as budgets tighten.

Iger has addressed these theatrical concerns several times since returning to the helm of the company in late 2022.

Last March, he told attendees at the Morgan Stanley Technology, Media and Telecommunications Conference that he wished Marvel would have more new content and make fewer sequels, or at the very least, be more selective about he gives the green light to the consequences. He reiterated that sentiment in November at the DealBook Summit in New York, where he also said he would no longer tolerate his company’s partners and creative team prioritizing messaging over storytelling.

“We have to entertain first. It’s not about messages,” he said.

Change at Disney Studios will take time, especially after shutdowns due to last summer’s writers’ and actors’ strikes hampered production. However, box office analysts predict a strong turnaround for the company in 2026.

The 2025 film calendar ends with a third Avatar film in mid-December, meaning ticket sales will continue into the following year. Then this summer begins with an Avengers team-up movie, currently titled “The Kang Dynasty,” followed by a Star Wars “Mandalorian” movie over Memorial Day weekend. Another Star Wars movie will close out Disney’s big year in December 2026.

The track record of these franchises suggests that they could generate staggering box office success.

“Disney hit the absolute pinnacle in 2019… with an assortment of films that perfectly placed the disparate pieces of the puzzle of Marvel, Pixar, Lucasfilm and Walt Disney Animation into a non-stop blockbuster machine, and the result was l “box office equivalent of the 100-year flood,” said Paul Dergarabedian, senior media analyst at Comscore.

The 2026 slate also includes three untitled Marvel movie dates, an unnamed Pixar movie, a Disney animated movie scheduled for Thanksgiving and six other Disney titles.