• by Wayne Friedman , Staff Writer, January 16, 2023

Just weeks after the return of Bob Iger as CEO of Walt Disney -- which was hailed as a strong positive move by observers -- longtime activist investor Nelson Peltz wants to see major changes in the company with a stronger focus on profitability.

This could potentially cause major disruption for what may be the largest and highest-profile U.S. media company.

Peltz has been known to pursue an activist role at target companies for years.

The trouble is that talking up "profitability" in investor-speak can be short-term financial thinking to many -- running somewhat counter to the word "growth." That would be a challenge for Disney -- which, like other media companies, is taking on the difficult task of starting up a new streaming operation from scratch.

Returning Disney CEO Bob Iger already has his hands full trying to steer the big media company toward a better future -- which includes transitioning to streaming from linear TV, maintaining its parks business in the wake of what may be more COVID-19-related disruptions, as well as keeping its movie business on a post-pandemic growth track.

Disney still estimates its direct-to-consumer streaming business to be profitable by around 2025.

But that’s two years from now -- with the possibility of some type of recession taking effect later this year. So all this could upset those estimates going forward.

More trouble could come with the bottom line for many critics of streaming business: it comes down to spending billions on content. At the same time, Disney and other companies looking to grow streaming still need to service their legacy TV networks with their own original content.

Netflix doesn’t have these worries right now. In the fourth quarter, it released over 1,100 TV episodes -- four times the total of second-place Amazon Prime Video. Disney+ released around 207 episodes. Third place for Disney in any media business is not the place that it needs to be.

So that brings us to profits. And now more analysts are looking at whether Disney can, for example, sell off ESPN or other ABC TV networks.

In addition, critics in retrospect are wondering if Disney's deal to buy half of 21st Century Fox's movie and TV businesses for $71.3 billion in 2019 -- a deal made under Iger's original reign as chief executive-- still makes sense financially.

Some would point to the nearly $1.9 billion the theatrical movie “Avatar: The Way of Water” has pulled in globally for Disney.

Activist stock market investors, of course, rarely have the patience to wait for a new CEO’s long-term plans to bear positive results that could be years in the making.

So.. will Iger move quickly, or just resist one major activist's attempt to find alternatives? Right now, there is no consideration of a possible board seat for Peltz.

This could be a long and complicated ride.