66 slides from Walt Disney Company (the)'s proxy contest presentation, Mar 11, 2024
Slide 1: The Right Board, The Right Strategy: Disney's Plan for Shareholder Value Creation
The Walt Disney Company THE RIGHT BOARD, THE RIGHT STRATEGY Disney’s Plan For Shareholder Value Creation MARCH 2024 Disclaimer Forward-Looking Statements Certain statements in this presentation may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform
Slide 2: You cannot "restore the magic" if you don't understand magic
You cannot “restore the magic” if you do n ’t understand magic 3 Disney has an unparalleled creative engine that drives shareholder value creation Our 100 years of incomparable storytelling excellence has resulted in best in class assets and timeless, beloved characters for all ages Our creativity m
Slide 3: This Board is already delivering on Disney's potential
This Board is already delivering on Disney s potential 4 1 Diluted EPS excluding certain items is a non GAAP financial measure. The most comparable GAAP measure is diluted EPS. See page 2 for how we define and calculate this measure and why Disney is not providing a forward looking quantitative reco
Slide 4: Disney is positioned to thrive amid unprecedented industry disruption
DISNEY IS POSITIONED TO THRIVE AMID UNPRECEDENTED INDUSTRY DISRUPTION 5
Slide 5: Our strategic transformation, building on four key priorities, is working
Our strategic transformation, building on four key priorities, is working 6 1 DTC streaming businesses operating income is a non GAAP financial measure. The most comparable GAAP measures are segment operati ng income for the Entertainment segment and Sports segment. See page 2 for how we define and
Slide 6: We are delivering on our commitments to create superior, sustainable shareholder value
We are delivering on our commitments to create superior, sustainable shareholder value in a rapidly changing ecosystem 7 1 As of Q1 FY24; DTC streaming businesses operating income is a non GAAP financial measure. See page 2 for how we define and calc ulate this measure and why Disney is not providin
Slide 7: Disney's unparalleled IP and storytelling have been a core strategic advantage
Disney’s unparalleled IP and storytelling have been a core strategic advantage for over 100 years 8 1 Unmatched content creation and storytelling capabilities generate our iconic IP and franchise tentpoles to maximize our audience and impact A FILM AND TV STUDIOS CONTENT DISTRIBUTION PRODUCTS AND EX
Slide 8: Enduring franchises highlight our powerful IP and unique monetization capabilities
Enduring franchises highlight our powerful IP and unique monetization capabilities 9 Source: Company data. 1 Reflects the ratio between revenue and investment on titles released following Disney’s acquisition of the IP. Revenue reflec ts aggregate 10 year revenue streams, both generated and expected
Slide 9: By restoring authority to creative leaders, Disney is improving efficiency and effectiveness
By restoring authority to creative leaders, Disney is improving efficiency and effectiveness 10 1 BEST-IN-CLASS BUSINESS CREATIVE LEADERSHIP MANAGING ICONIC FRANCHISES Alan Bergman & Dana Walden CO-CHAIRMEN, DISNEY ENTERTAINMENT Josh D’Amaro CHAIRMAN, DISNEY EXPERIENCES Jimmy Pitaro CHAIRMAN, ESPN A
Slide 10: Disney is focusing on core brands and franchises to deliver higher returns
UNPARALLELED PORTFOLIO OF CORE BRANDS AND FRANCHISES Disney is focusing on core brands and franchises to deliver higher returns 11 Disney has the ability to create, distribute, and monetize our IP in unparalleled ways The longevity of our franchises and our ability to progress consumers across our u
Slide 11: Upcoming films: originals, reimagined classics and sequels
UPCOMING FILMS: ORIGINALS, REIMAGINED CLASSICS & SEQUELS UNPARALLELED SUCCESS OF DISNEY’S FILM STUDIOS Our creative engine remains powerful 12 Note: Reflects select publicly announced planned releases as of 02/07/24 and is subject to change 1 Rationalize volume and cost of content Carefully evaluate
Slide 12: TV and streaming consumption habits dramatically shifted
TV and streaming consumption habits dramatically shifted Streaming consumption is projected to nearly double from 2019 to 2027, primarily at the expense of linear Audiences want the flexibility to decide what, when, and how they watch Ad free offerings have conditioned consumers to reduced ad loads
Slide 13: The Board is overseeing a carefully planned, long-term strategy
The Board is overseeing a carefully planned, long-term strategy that positions Disney for future success and value creation 14 2 2015-16: Deterioration of Pay TV ecosystem became increasingly evident Pay TV bundle was still the dominant video product but competition from new video services was growi
Slide 14: Disney's TSR outperformed relevant peers facing a similar transition
(41%) (81%) (83%) +22% (18%) (39%) Disney’s TSR outperformed relevant peers facing a similar transition from legacy Pay TV to streaming 15 The most relevant peers to evaluate Disney’s business challenges, progress, and TSR are “pure-play” legacy media companies managing the generational disruption a
Slide 15: Disney has built leading, scaled global streaming platforms in just four years
Disney has built leading, scaled global streaming platforms in just four years, differentiated by difficult to replicate content 16 Source: Company filings, FactSet; 1 Global subscriptions based on most recent earnings report for each company except Prime Video which is based on Bank of Ameri ca equ
Slide 16: Compelling strategic rationale for both acquisitions
COMPELLING STRATEGIC RATIONALE FOR BOTH ACQUISITIONS Major deals further differentiated Disney s streaming business, with key content from TFCF (Fox) and technology from BAMTech 17 Source: Company data, public filings 2 Broadened our portfolio of world class IP and general entertainment content Enab
Slide 17: Disney is driving profitability toward double digit levels
Disney is driving profitabili t y toward double digit levels 18 Source: Company data. 1 DTC streaming businesses operating income is a non GAAP financial measure. The most comparable GAAP measures are segment operat ing income for the Entertainment segment and Sports segment. See page 2 for how we d
Slide 18: Disney's delta in profitability to Netflix results from explainable differences
Disney s delta in profitabili t y to Netflix results from explainable di f ferences that we are actively addressing 19 Netflix and Disney DTC launched at different times with unique strategies and investment requirements, resulting in different fi nancial profiles reflecting their respective circums
Slide 19: Disney continues to build ESPN into the preeminent digital sports platform
Disney continues to build ESPN into the preeminent digital sports platform 20 3 World’s leading sports brand, reaching millions of fans daily across platforms Reimagine digital viewing experience to drive engagement and maximize monetization 96 of top 100 US broadcast telecasts in 2023 were sports D
Slide 20: ESPN's offerings represent our vision for the future of sports
ESPN’s offerings represent our vision for the future of sports 21 3 BUILDING INTO THE PREEMINENT DIGITAL SPORTS PLATFORM Unparalleled portfolio of rights Dedicated focus on sports Strong reach Integrate betting, commerce, games, etc. Utilize data to maximize monetization and serve fans Leverage best
Slide 21: Disney is investing strategically in our most profitable segment, Experiences
FY09 FY23 $4.9 $7.0 FY19 FY23 $21.6 $28.2 FY19 FY23 Disney is investing strategically in our most profitable segment, Experiences 22 Source: Company data. 1 Includes Domestic Parks, International Parks, Disney Vacation Club and Cruise Line; 2 OI and margin based on FY12 FY23 period; 3 ROIC is a non
Slide 22: Strong ROIC guides and innovation enable our investment plans
Strong ROIC guides and innovation enable our investment plans 23 Note: Reflects publicly announced planned openings and events as of 02/07/24; list is not exhaustive; 1 TEA = Themed Entertainment Association, IAAPA = International Association of Amusement Parks and Attractions, VES = Visual Ef fe ct
Slide 23: Disney is rationalizing costs and driving operating leverage
Disney is rationalizing costs and driving operating leverage 24 Source: Company data. 1 Puck, The Villain of the Year Is … The Three-Headed Monster Tormenting Disney, 01/02/24; 2New York Times, A Big Day for the House of Mouse, 11/08/23 We continue to seek additional efficiencies without compromisin
Slide 24: Disney restored robust FCF, enabling capital return to shareholders
Disney restored robust FC F , enabling capital return to shareholders 25 Source: Company data, FactSet. 1 Free cash flow reflects cash provided by operations less investments in parks, resorts and other property. Free cash flow is a non GAAP financial measure. The most comparable GAAP measure is cas
Slide 25: Disney maintains the strongest balance sheet in the sector
Debt ($bn)1 Total $25 $21 $44 $56 $52 $46 $45 $46 Net 21 17 39 39 36 35 30 39 Disney maintains the strongest balance sheet in the sector, which supports future growth opportunities and shareholder returns 26 1 Each of Net Debt and Net Leverage is a non-GAAP financial measure. Please see page 2 for a
Slide 26: Disney is successfully delivering transformational change in a rapidly changing marketplace
Disney is successfully delivering transformational change in a rapidly changing marketplace 27 Source: Company filings. 1 Based on Disney Entertainment DTC; 2 Free cash flow reflects cash provided by operations less investments in parks, resorts and other property. Free cash flow is a non GAAP finan
Slide 27: A strong, independent, and qualified Board is focused on delivering sustained shareholder value
A STRON G , INDEPENDEN T, AND QUALIFIED BOARD IS FOCUSED ON DELIVERING SUSTAINED SHAREHOLDER VALUE 28
Slide 28: The Board launched a clear, transparent process for a successful CEO transition
The Board launched a clear, transparent process to deliver a top priority: a successful CEO transition 29 1 Represents committee composition following Disney’s 2024 annual meeting; 2 Puck, Iger’s Peltz Defense, 12/10/13 The Board is focused on both selecting a new CEO and positioning the new CEO for
Slide 29: Nike's and Morgan Stanley's CEO transitions were both well regarded
NIKE’S AND MORGAN STANLEY’S CEO TRANSITIONS WERE BOTH WELL REGARDED Directors Mark Parker and James Gorman have both executed high-profile, seamless CEO transitions 30 Mark Parker was President and CEO of Nike for 14 years The Nike Board conducted a thorough search, evaluating the skills needed in t
Slide 30: Disney's independent, highly qualified Board is focused on delivering superior, sustained shareholder value
Disney s independent, highly qualified Board is focused on delivering superio r , sustained shareholder value 31 Source: Proxy Statement of The Walt Disney Company, 02/01/24 Five independent Directors ( (**) were added within the last three years and two more (**) were added within the last five and
Slide 31: This Board is built around diverse skillsets critical to Disney's success
This Board is built around diverse skillsets critical to Disney s success 32 Source: Proxy Statement of The Walt Disney Company, 02/01/24; please see Proxy Statement for additional detail describing eac h s kill SKILLS CENTRAL TO DISNEY’S STRATEGY Barra Catz Chang Darroch Everson Froman Gorman Iger
Slide 32: Trian's campaign targets two Disney directors with important skillsets
Trian s campaign targets t wo Disney directors with skillsets and expertise that are an impo r tant component of the Board s oversight 33 Extensive foreign relations expertise provides uniquely valuable insights on complex geopolitical issues affecting our strate gy and operations Mr. Froman has sig
Slide 33: Trian's campaign targets two Disney directors with important skillsets (cont.)
Trian s campaign targets t wo Disney directors with skillsets and expertise that are an impo r tant component of the Board s oversight 34 Long term shareholder perspective, capital markets experience, and corporate governance expertise inform the Board’s ongoing accountability and responsiveness to
Slide 34: Trian wants to replace these valuable directors with nominees who lack relevant expertise
Trian wants to replace these valuable directors with nominees who lack relevant and non duplicative expertise 35 Source: FactSet as of 02/22/24; 1 Reflects stock performance of iHeartMedia from 05/17/19 to 02/22/24 Nelson Peltz ⨯ At Disney, Bob Iger not Jay Rasulo was the driver of the company’s str
Slide 35: Management compensation is heavily tied to Disney performance
100% 101% 102% 124% 160% 53% 36% 7% 4% Management compensation is heavily tied to Disney performance 36 Source: Company filings and public filings 1 Reflects actual compensation as of latest fiscal year 2 Reflects average of co-CEOs’ latest total compensation figures Disney’s Compensation Committee
Slide 36: This Board has "skin in the game" and the expertise to deliver on our growth strategy
This Board has “skin in the game” and, more importantly, has the expertise to deliver on our growth strategy 37 Source: Company filings and public filings; 1 Excludes Directors Darroch, Gorman, and Everson, who have served on the Board for less than three years, and equity value is based on shares a
Slide 37: Nelson Peltz, Ike Perlmutter, and Jay Rasulo are not what Disney needs right now
NELSON PELTZ, IKE PERLMUTTER, AND JAY RASULO ARE NOT WHAT DISNEY NEEDS RIGHT NOW 38
Slide 38: Peltz, Perlmutter, and Rasulo are not what Disney needs now
Peltz, Perlmutter, and Rasulo are not what Disney needs now 39 Peltz does not understand the challenges Disney is facing Peltz’s “theses” are nothing new and underscore his lack of understanding of both Disney and the media industry Peltz’s slate, including his silent partner Ike Perlmutter, would h
Slide 39: Peltz doesn't understand the challenges Disney is facing
Peltz doesn’t understand the challenges Disney is facing … 40 1CNBC, Squawk Box, 02/08/24; 2 Puck, The Crocodile’s Idea, 02/04/24 Peltz has ignored the central challenges Disney is facing and the core strengths it is leveraging to successfully navigate this moment in time – The media sector is under
Slide 40: ... which he readily admits every time he is on CNBC
… which he readily admits every time he is on CNBC … 41 1 CNBC interview, Squawk on the Street , 01/18/24; 2 CNBC interview, Money Movers , 02/14/24 1 NELSON PELTZ SAID: IT IS CLEAR THAT: “… they question the relevant experience you have in terms of the entertainment and media business and why you w
Slide 41: ... and his partner, Jay Rasulo, is equally oblivious on CNBC
… and his partner, Jay Rasulo, is equally oblivious on CNBC 42 1CNBC interview, Money Movers, 02/27/24; 2 Reflects stock performance of iHeartMedia from 05/17/19 to 02/22/24 1 Jay Rasulo doesn’t understand why Disney acquired 21st Century Fox He’s stuck with legacy “analog thinking” since his only m
Slide 42: Peltz's "theses" are nothing new and underscore his lack of understanding
Peltz s “theses” are nothing new and underscore his lack of understanding of both Disney and the media industry 43 1 Trian Definitive Proxy Statement, 02/01/24; 2 Bloomberg, Peltz’s Plan to Fix Disney Includes Bundling ESPN+ With Netflix , 01/30/24; 3 For our combined streaming businesses; 4 DTC str
Slide 43: Peltz's slate exacerbated by his silent partner, Ike Perlmutter, would harm Disney
Peltz’s slate exacerbated by his silent partner, Ike Perlmutter would harm Disney … 44 3 Peltz has never been involved in a business with creativity at its core and doesn’t understand the media sector Peltz’s “suggestions” are dangerous, uninformed, and value-destructive Former Marvel exec Ike Perlm
Slide 44: ... and does not serve shareholders' long-term interests
… and does not serve shareholders’ long-term interests 45 1 Represents the period from May 2013 through April 2021 and assumes the reinvestment of dividends; 2 Fortune, ‘The wizard vs. the illusionist’, 11/07/23; 3 13D Monitor, The Most Activist Place on Earth, 12/14/23; 4 Puck, What I’m Hearing: Th
Slide 45: Disney has consistently sought constructive engagement, which Peltz has ignored
Disney has consistently sought constructive engagement, which Peltz has ignored 46 1 Proxy Statement of The Walt Disney Company, 02/01/24 and 02/10/23 5 WHAT HAVE PELTZ, PERLMUTTER, AND RASULO BROUGHT? WHAT HAS DISNEY OFFERED? 2 proxy fights >20 meaningful interactions since Feb. 2023 and 3 meetings
Slide 46: Disney has always been open to constructive shareholder engagement, as ValueAct can attest
Disney has always been open to constructive shareholder engagement, as ValueAct can attest 47 Source: FactSet. 1 Summary metrics reflect investments in 21st Century Fox, Adobe, Microsoft, The New York Times, Salesforce, Spotify and Nintendo; 2 Includes Adobe, Microsoft, Salesforce and 21st Century F
Slide 47: Neither Peltz nor Rasulo have the skills to help Disney
May '19 May '20 May '21 May '22 May '23 As their track records on other media related boards demonstrate, neither Peltz nor Rasulo have the skills to help Disney 48 Source: FactSet as of 02/22/24. 1 Reflects TSR of MSGN from 10/28/14 (when Peltz joined Board, based on announcement date) to 09/30/15
Slide 48: Peltz and his Trian colleagues chronically underdeliver on boards
Peltz and his Trian colleagues chronically underdeliver on boards 49 Source: FactSet as of 02/22/24. 1 Nelson Peltz, CNBC interview, 01/12/23; 2 The performance numbers represent total shareholder returns, including the impact of dividend reinvestment and adjusting for sp in offs, from one business
Slide 49: Peltz's investment returns relative to his benchmark do not support his rhetoric
Peltz s investment returns relative to his benchmark do not support his rhetoric … 50 7 Peltz claimed: “I have probably served on more boards than anybody that I know … whatever Board it was, has outperformed the S&P by 900bps annually 1 But when using a complete dataset, Peltz or Trian involvement
Slide 50: Bob Iger has delivered strong returns for Disney shareholders throughout his tenure
09/30/05 02/29/24 … on the other hand, Bob Iger has delivered strong returns for Disney shareholders throughout his tenure as CEO 51 Source: FactSet. 1 Nelson Peltz, CNBC interview, 01/12/23; 2 TSR represents stock price appreciation plus reinvestment of dividends; 3 Currently includes CHTR, CMCSA,
Slide 51: Conclusion
aCe Diep conn CONCLUSION
Slide 52: You cannot "restore the magic" if you don't understand magic
You cannot “restore the magic” if you do n ’t understand magic 53 Disney has an unparalleled creative engine that drives shareholder value creation Our 100 years of incomparable storytelling excellence has resulted in best in class assets and timeless, beloved characters for all ages Our creativity
Slide 53: This Board is already delivering on Disney's potential
This Board is already delivering on Disney s potential 54 1 Diluted EPS excluding certain items is a non GAAP financial measure. The most comparable GAAP measure is diluted EPS. See page 2 for how we define and calculate this measure and why Disney is not providing a forward looking quantitative rec
Slide 54: Blackwells is proposing a solution in search of a problem – Appendix A
BLACKWELLS IS PROPOSING A SOLUTION IN SEARCH OF A PROBLEM 55 APPENDIX A
Slide 55: Blackwells "theses" underscore their lack of understanding of Disney
Blackwells “theses” underscore their lack of understanding of Disney 56 1 Blackwells Capital Letter to Fellow Shareholders, 02/06/24; 2 Proxy Statement of Blackwells Capital, 02/06/24; 2 Blackwells Capital Releases its Vision for the Future of Technology at Disney, 02/26/24 BLACKWELLS THESIS THE REA
Slide 56: Breaking Disney up would destroy key competitive advantages
Breaking Disney up, including its real estate assets, would destroy key competitive advantages 57 Our core competitive advantage is our unparalleled IP coupled with the unique ability to leverage and monetize it through film, streaming, consumer products, parks, and experiences Walt Disney’s Synergy
Slide 57: Disney is already a leader in deploying emerging technologies
Disney is already a leader in deploying emerging technologies 58 1 Blackwells Capital Releases its Vision for the Future of Technology at Disney, 02/26/24 BLACKWELLS THESIS 1 THE REALITY FRAGMENTATION “Severe technological fragmentation between Disney’s segments and sub segments” Disney has taken mu
Slide 58: Disney is already a leader in deploying emerging technologies (cont.)
Disney is already a leader in deploying emerging technologies (cont.) 59 1 Blackwells Capital Releases its Vision for the Future of Technology at Disney, 02/26/24 BLACKWELLS THESIS 1 THE REALITY MISSING NATIVE TECHNOLOGY STACK “Disney bolts on technological services, rather than developing them from
Slide 59: Blackwells nominees are unqualified for election to Disney's Board
Blackwells nominees are unqualified for election to Disney’s Board 60 1 Blackwells Disney Investor Presentation, 03/04/24 Craig Hatkoff ⨯ Has never served as a director of a public company ⨯ Her executive and investor experience which focused on online marketplaces, early stage consumer, SaaS, and i
Slide 60: Financial Reconciliations – Appendix B
FINANCIAL RECONCILIATIONS 61 APPENDIX B
Slide 61: Reconciliation of DTC streaming businesses operating losses
Reconciliation of DTC streaming businesses operating losses 62 Source: Company filings The following tables reconcile Entertainment and Sports segment operating income (loss) to the DTC streaming businesses opera tin g loss: Quarter Ended ($MM) December 30, 2023 December 31, 2022 Entertainment Sport
Slide 62: Reconciliation of Diluted EPS excluding certain items
Reconciliation of Diluted EPS excluding certain items 63 Source: Company filings; 1 Tax benefits / expense is determined using the tax rate applicable to the individual item; 2 Before noncontrolling interest share; 3 Net of noncontrolling interest share, where applicable. Total may not equal the sum
Slide 63: Reconciliation of free cash flow
Reconciliation of free cash flow 64 Source: Company filings; 1 Trending to exceed $8bn in free cash flow for FY24 The following table reconciles the Company’s consolidated cash provided by continuing operations to free cash flow: Year ended ($MM, unless otherwise noted) Sept. 28, 2019 Oct. 3, 2020 O
Slide 64: EBITDA, net debt and leverage reconciliation
EBITDA, net debt and leverage reconciliation 65 Source: Company filings. Note: numbers may not tie due to rounding. 1 Excludes TFCF and Hulu amortization of intangible assets ($BN) FY17 FY18 FY19 FY20 FY21 FY22 FY23 Q1 FY23 Q1 FY24 LTM Q1 FY24 Income from continuing operations before income taxes $1
Slide 65: Return on invested capital reconciliation
Return on invested capital reconciliation 66 1 Reflects the average of invested capital at the end of such fiscal year and the end of the immediately prior fiscal year. Inv est ed capital is defined as the remainder of the segment's total assets at a fiscal year end minus the sum of such segment's a
Slide 66: The Walt Disney Company
The Walt Disney Company @Disney and related entities