Why Nelson Peltz Can’t Fix Disney

Judging by two news events this week, next year will be dominated by new episodes in that long-running series, “The Decline of the TV Industry.” First, widespread reports that Shari Redstone is in talks to sell her stake in CBS owner Paramount Global suggest the Redstone family is finally throwing in the towel. Or at least they’re trying to, if they can find someone to catch it. And second, Nelson Peltz stepped up his pressure on Disney by nominating himself and former Disney Chief Financial Officer Jay Rasulo (the latter playing the role of Brutus to Disney CEO Bob Iger’s Caesar) for election to Disney’s board. At the heart of both dramas is shareholder dissatisfaction with the sorry state of the TV industry. Shareholder activism can’t solve that problem, and selling only kicks the issue to someone else.

The core issue is that we’re transitioning from the cable TV business model, which was skewed to making unreasonable profits at the expense of viewers, to a streaming one that gives consumers more control. Even as streaming services introduce ads and ratchet up prices to cut their losses, we can still easily chop and change streamers we’re paying for, which isn’t true with cable. (I recently discovered I was paying, via Amazon Channels, for five services I’d stopped watching. It took a minute to cancel four of them.) And, given the competition from Netflix, Amazon and Apple, this consumer-friendly approach is likely to persist. What that means is the TV industry’s fat profit margins of years past are not coming back.