• by Wayne Friedman , Staff Writer, January 8, 2024

The Walt Disney deal with ValueAct Capital -- an "information-sharing” agreement -- mimics a move Microsoft made about a decade ago, apparently.

Back then there was pressure from investors to transition the software giant into the digital age.

Microsoft made lots of money selling software. But the cloud was growing by leaps and bounds -- and that’s where all digital business was headed.

Microsoft -- which seemed to be in trouble at the time -- made the switch, with some bumps along the way. But it got there via a similar deal pushed by ValueAct -- bluntly an activist investor. 

Microsoft needed to catch up to a direct-first company like Amazon, which was already knee deep with Amazon Web Services and everything cloud-related.

Now that same investment company has made a similar deal with Walt Disney -- with the probability of giving it a seat on the board of directors, according to Mason Morfit, co-chief executive officer of ValueAct.

All that looks to buffer Nelson Peltz -- another activist investor -- which has a seat on Disney.

Like Microsoft, this is a somewhat similar transition is for Disney moving to streaming from the linear TV business.  Among other things, Disney needs to find a way to catch up to the likes of Netflix, of course.

What happens after that? Well, Microsoft is strong in the cloud business right up there with you know who -- this after 10 years of working hard to get to this place. 

What about Disney and streaming? Investors may have a tough time waiting ten years to play a slow game of catch-up. 

But ask yourself right now if Disney can envision one day to be dramatically on top of the streaming business -- or at least on par with say Netflix and Amazon.

What might this include? Obviously, linear TV networks restructuring and/or an entire sale of the business.

Of course, that would be tough task right now, as it still brings a hefty piece of overall total TV (linear TV and streaming) revenue, around 50% with positive cash flow. 

In any event, watch Disney closely this year to see what aggressive but perhaps major changes take place -- especially on a more granular level -- with ABC and or ESPN.