Disney proxy battle heats up: Here's what you need to know

So let’s dive into all things Disney with CNBC contributor Jim Stewart, along with UBS media and telecom analyst John Hudlik, who just raised his Disney price target by $20 this morning. Jim, let’s start things off with you. Since you wrote the book on Disney, Disney Wars, you know so well how this company works. What do you predict will happen on Wednesday when we get the results of this vote? And how do you think this whole proxy battle will shape how Disney changes in the coming years? Well, those are, those are great questions. And of course, I don’t have a crystal ball. You don’t know how it’s going to turn out. I mean, there’s a tremendous amount of suspense about this. I will say, I would have said a few weeks ago that I thought there was little doubt that Disney would win. It’s tough to win a proxy contest. The big, you know, companies like Vanguard and Fidelity, they’re very reluctant to embrace shareholder challenges to existing management. But Peltz has recently picked up a lot of support from some of the advisory services and there is this looming issue of succession hanging over the company. And would Peltz really be in a position to add value to that very important process that’s going on? So there are a lot of balls in the air. It’s been a very nasty fight, a lot of character assassinations going on, all kinds of claims being made, but it’s I think it’s go down to the finish line. I think it’s also worth remembering that even if Peltz doesn’t win but gets a substantial shareholder vote, I don’t think the board can ignore that. He has said he’s not going away. Even if he does lose, he’ll remain a major shareholder. If he gets a lot of support, the board will have to listen to him and remember his, you know, years ago, Eisner was the CEO. Disney won a shareholder challenge, but there was so much opposition that he ended up having to leave. Yeah, such a fascinating history to this, to this company. And we’re right now showing the board of directors that is up for reelection. John, you have this fascinating note here outlining all the different reasons why you’re optimistic and bullish on Disney stock. You’re raising your EPS estimates and also upping your price target by 40 by $20 to $140. How much do you see this? This pelts proxy battle as a distraction and potentially limiting Iger’s ability to accomplish some of the things he’s put in motion over the past year? Yeah, I think it is a concern. I would say as of now I I think it’s it’s a distraction and it it’s taking a lot of management time. But I would say that the early signs of a of a turn around orchestrated by by Bob Iger’s return are are in motion. I think we’re seeing the the signs and then I think we capture a lot of that improvement in in our in our new model in our in our report today. But I think there’s risk to that. I mean if if helps wins, if there’s a change in the board, I do think there’s a risk that that Bob could lead the firm and and really jeopardize a lot of the gains we’ve recently seen in the company. Yeah, I want you to specifically dive in here to your outlook on direct to consumer and and where you see that business going, John, because that’s a key part of your your bullish note here and the fact that you see those D2C margins increasing. This is something that’s also important to Nelson Peltz. But what’s your outlook for the streaming business, especially today as we start to see the integration of Hulu and Disney Plus? Yeah, and I think that’s a key issue, Julia. The we’re the the cusp of seeing Disney Plus and Hulu put together as as one service probably by the end of the year. We do think there’s a substantial amount of synergies and putting those businesses together and I we we think it’s good for growth and and I think you know, you really need to compare the operations of of that business to where Netflix is. Last year Disney Plus despite over $20 billion in revenues at the D2C segment lost over $2 billion. If we could get anywhere close to the Netflix margins of over 20%, this could be a substantial, you know, earnings generator for the company and we think the company’s on the pathway to prove that out.