Yahoo Finance Disney, Paramount: Entertainment giants under pressure
As the battle ends for one media behemoth, one begins for another. Last week, media legend and Disney (DIS) guru Bob Iger successfully defeated a months-long corp by activist investor Nelson Peltz. Meanwhile at Paramount (PARA), media is fielding multiple bids and has entered into exclusive merger talks with Skydance.
With Disney’s proxy battle now finally behind it and Paramount’s sale well on the horizon – one thing is clear. Changes are coming.
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Video transcript
- It's been a hectic time for two high-profile media giants, Disney and Paramount. Following a months-long proxy battle, Disney shareholders successfully fended off activist investor Nelson Peltz. Meanwhile, Paramount had yet another buyer step into the ring, as its high-profile sale remains undetermined. As these companies face pivotal inflection points. What does this all mean for the complicated streaming landscape?
Peltz's proxy campaign is shake up Disney's board came to an end last week. Although the activist did receive some support in his fight, he ultimately was unable to secure enough votes to place himself. Along with former Disney CFO Jay Rasulo onto the company's board. Peltz's arguments in his activist bid included the loss of 10's of billions in shareholder value, a drop in consensus earnings estimates for the next two years, and disappointing studio content.
To note, Disney has yet to turn a profit since its 2019 launch, but the company says it's on track to reach streaming profitability by the end of its current fiscal year. And then there's Paramount, the company is currently Fielding multiple bids as M&A activity picks up on Wall Street. David Ellison's Skydance Media, and private equity firm Apollo Global have both made offers to purchase the media company.
Paramount recently declined an all cash deal from Apollo but has entered into exclusive merger talks with Skydance. So far it's TBD on Paramount's future but experts say consolidation in this space is imminent. Both Disney and Paramount highlight the pressures facing legacy media today. Streaming remains an unprofitable business for the majority while cable TV revenues have nosedived as more consumers cut the cord.
Competition is also more intense than ever and yet these companies still have to figure out a way to make money, not just cut costs. With Disney's proxy battle now finally behind it and Paramount sale well on the horizon. One thing is clear changes are coming and they're coming fast.
