Welcome back to Dry Powder. I’m Bill Cohan.

It’s no secret that Bob Iger, now on his second tour running the show at Disney, is facing a new set of challenges with Nelson Peltz rattling the cage. In today’s Dry Powder, a close look at Peltz’s storied activist history, and some unsolicited advice for Iger.

But before we jump in, you’ve probably seen some of my partners share a link to a survey that Puck is conducting to better understand who, exactly, our readers are. I humbly implore you to do the same. It takes less than five minutes to finish, and we hope it will make things even better than they already are around here. You can take it here. Thanks as always.

When Chapek was replaced by Bob Iger, Peltz hardly paused. He met with the new management and the old board members, resurfaced his investment thesis and asked for a director’s chair of his own. He owned less than one percent of the company, sure, but he had amassed about twenty times more stock than the rest of the directors combined, minus Iger. After a series of blow-offs, however, Peltz commenced a proxy battle against Disney to get the board seat that Iger denied him.

Then, on Monday, Peltz helped facilitate the ascent of Hein Schumacher as the C.E.O. of Unilever, the European food conglomerate. With Peltz’s full support, Schumacher, 51 years old, will take the reins of Unilever in July from Alan Jope, who announced his retirement last year. Peltz knew and liked the new C.E.O. from his nearly seven years on the board of Heinz, where Schumacher was once an executive. It turns out that Schumacher, the C.E.O. of Royal FrieslandCampina, a Netherlands-based dairy and nutrition company, is also a fellow Unilever board member with Peltz. Peltz has been on the Unilever board since last May after he announced that Trian had bought 37.4 million Unilever shares, a 1.5 percent stake in the company, worth roughly $2 billion these days. Once again, Peltz got what he wanted.

At Disney, Iger and his fellow executives and directors have decided to fight to keep Peltz off the Disney board. Unilever and Jope chose another strategy: engagement. They invited Peltz onto the Unilever board without a fight. The Unilever stock is up about 14 percent since the company announced that Peltz would be joining the board. And Jope has said he’s glad Peltz has been around to help Unilever think through its strategic challenges. “Nelson Peltz has joined our board and brought all kinds of good ideas,” Jope told Yahoo Finance on January 17. “His view on what the company needs to do is very aligned with the agenda that we’re working on.… Peltz is an experienced board member who is very focused on performance and setting up the company for the future.”

Nils Andersen, the chair of the Unilever board, has also sung Peltz’s praises. “I was personally really happy to welcome [Peltz] on the board, and I have not been disappointed and I think neither has the rest of the board,” Anderson said in December. “He is constructive, he is very insightful and of course brings a lot of analytical firepower… I have a lot of respect for his points of view…”

Iger, his management team and his board, don’t seem to need or to want Peltz’s help steering Disney through its thicket of strategic challenges. They have repeatedly rejected Peltz’s requests to join the Disney board, dating back to mid last year, around the time that he was invited to join the Unilever board. More recently, they responded to his request by publicly noting that he lacks fundamental experience in media and entertainment. (As my partner Matt Belloni has previously noted, the Disney board is actually short on media and entertainment experience outside of Iger, himself.) Now, Iger has a proxy fight on his hands with one of the world’s premier corporate combatants. As I have written previously, I don’t see this ending well for Disney as long as it keeps fighting Peltz. The Disney stock is up about 12 percent since Peltz and Trian initiated a proxy fight against Disney, on January 12. And that’s largely due, I think, to Peltz’s presence in the mix, suggesting that there’s a good chance that his proxy vote may succeed and the status quo at Disney is disrupted. A Peltz victory will put a triumphant and potentially hostile force inside the Disney boardroom, something Iger definitely doesn’t want if he can possibly avoid it.

Peltz may seem like a pesky billionaire mosquito alighting on Iger’s shoulder, but he’s not without his charms, either. As a Disney board member he could help Iger accomplish his most important task: choosing his successor, something Iger botched in 2020 when he chose Chapek and later came to regret it, setting the stage for his return in November. Finding successor C.E.O.s is something Trian seems to relish. At 80 years old, Peltz has a wide and diverse web of relationships, and Schumacher’s ascent is but the most recent example. Trian endorsed the selection of Larry Culp as John Flannery’s successor at GE. Flannery had invited Culp onto the GE board with the full support of Ed Garden, Peltz’s son-in-law and fellow partner at Trian, and then when Garden went on the GE board, with Flannery’s support, Garden and Culp worked together to defenestrate Flannery after 15 months at the helm of GE. It was not an admirable succession process by any stretch of the imagination, but Trian did once again get the successor it wanted.

Peltz also got the successor he wanted at DuPont back in the day. In that case, back in 2015, Trian actually lost its proxy fight with DuPont, by a 54 to 46 percent vote. Trian may have lost that battle, but it won the war. Five months after the proxy fight, the longtime DuPont C.E.O., Ellen Kullman, “resigned” as C.E.O. and was quickly replaced by Ed Breen, a DuPont board member who Trian favored to run the company. One of Breen’s first decisions, as the new DuPont C.E.O., was to ask Peltz and Trian to sign a confidentiality agreement and become part of the DuPont board’s confidential, strategic discussions. When the DuPont board subsequently held conversations about merging with Dow Chemical, the negotiations between the top executives of both DuPont and Dow were held at Peltz’s home.

Breen sang Trian’s praises. “I have the highest regard for Nelson Peltz and Ed Garden,” he said in 2017. “Since becoming C.E.O. of DuPont, I have talked many times with the Trian team and appreciate their insights on strategy and operations, as well as the collaborative and productive manner in which they have engaged with us. Their ability to rigorously analyze opportunities for long-term value maximization has been consistently demonstrated over the years.”

If Breen is right that Peltz can be a valuable strategic thinker, he could also be quite useful to Iger, especially as he comes to grips with the strategic Gordian knots facing Disney. Should Disney spin-off ESPN and load it up with some of Disney’s $50 billion in debt, as activist hedge fund manager Dan Loeb suggested after his firm, Third Point Management, took a stake in Disney last year? What should Disney do with ABC, its linear television network, now that it’s in secular decline? Perhaps a sale to Apollo Management, the buyout behemoth, would be in order to put a capstone on the private equity giant’s national network of local television stations? What about Hulu? Is it time for Iger to negotiate to buy the one-third stake in Hulu that it doesn’t already own? That deal can happen as early as a year from now, at a price that values Hulu at a minimum of $27.5 billion.

One creative idea for Disney that has been circulating around Wall Street lately is for the company to swap, in a tax-free deal, its 80 percent stake in ESPN for Comcast’s one-third stake in Hulu. In two research notes in the past few months, Peter Supino, a managing director and senior analyst at Wolfe Research, posited that shareholders of both Disney and Comcast would love the deal and the stocks of both companies would trade up. According to his January 18 research report, Supino estimates ESPN’s EBITDA to be around $2.2 billion and that Disney’s 80 percent stake in ESPN (Hearst owns the other 20 percent) would fetch around 7x-8x EBITDA or $12 billion to $14 billion. He thinks Comcast’s 33 percent stake in Hulu is worth around $11 billion, at a midpoint valuation, and that Comcast could make up the difference in value for Disney’s ESPN stake with $2 billion in cash.

Disney could, of course, use the Comcast cash to continue to pay down its sizable but not unmanageable debt load. (Supino thinks Disney should also think about selling ABC, which he values at around $3.5 billion, for cash, and use the proceeds from that sale to pay down debt, too.) Supino writes that the combination of NBC Sports and ESPN would be “irresistible to any sports fan and stand a much better chance of recreating its current revenues in [direct-to-consumer] as pay TV subscribers continue to decline” and make it a “preferred and vital distribution owner.”

Concludes Supino, “We think Disney should gain full control of Hulu to better monetize the asset through a more integrated platform as part of the Disney+ bundle, and we believe ESPN provides a superior currency to pay Comcast. For Comcast, the combination of ESPN and NBC vastly strengthens NBC’s long-term prospects, while providing a tax-free exit from Hulu for Comcast. With an ABC divestiture, Disney would reduce debt and nearly eliminate the company’s pay-TV overhang on its stock.” (Disclosure: Supino’s uncle, David Supino, was my boss and mentor at Lazard.)

After a rocky 2022, WBD is off to a roaring start with investors in 2023. The stock is up more than 50 percent in the month of January alone. The equity value of WBD is now back to around $35 billion. Combined with net debt of around $48 billion, WBD now has an enterprise value of $83 billion. It’s probably fair to say that a newly fangled NBCU, with 80 percent of ESPN, is not that far away from that kind of valuation—NBCU had $6 billion of (the dreaded) Adjusted EBITDA in 2022—making the outlines of a partnership between WBD and NBCU plenty complicated, sure, but not outside the realm of possibility, especially once the reverse Morris Trust rules permit WBD to do deals in April 2024.

Indeed, a combined NBCU-WBD, with Zaz running the show and Comcast as the 51 percent shareholder, might be worth around $175 billion, making the combination a formidable competitor for Disney, which these days has a market capitalization of around $250 billion.

Iger is probably betting the Trian gnat will be squished at the upcoming shareholder meeting. But Disney is the industry leader facing all sorts of complex strategic issues. You’d think Iger would want someone with proven brain power, craftiness, and real skin in the game on his side of the table.