- Elliott Funding Administration launched a podcast to affect Southwest Airways shareholders.
- The activist investor holds 11% of Southwest and is looking for a top-level shake-up.
- Podcasts provide cheaper, managed communication which have the potential to achieve retail traders.
Final week, activist agency Elliott Funding Administration launched a podcast as a part of its efforts to affect Southwest Airways shareholders.
Elliott, which constructed an 11% stake within the US airline, has known as for a brand new CEO and board members. The agency additionally instructed Southwest to assessment its operations and develop a plan to enhance efficiency.
Southwest’s inventory has shed practically half its worth within the final 5 years, and its passenger volumes are under pre-pandemic ranges regardless of robust journey demand. On an earnings name in July, firm executives stated revenues have been harm as a result of Southwest didn’t optimize summer time demand and confronted overstaffing due to Boeing’s airplane supply delays.
Southwest’s CEO, Bob Jordan, has been with the corporate for 3 a long time and was appointed as chief in 2022. Elliott stated Jordan and chairman Gary Kelly are answerable for the corporate’s underperformance.
The activist hedge fund began its public marketing campaign in opposition to Southwest’s management in June and known as for a December 10 shareholder vote to determine on Elliott’s eight board nominees.
Southwest’s 15-member board consists of 13 impartial members, in line with a submitting. Final month, the corporate stated it intends to nominate 4 new impartial administrators, doubtlessly together with a few of these proposed by Elliott.
Elliott stated its “Stronger Southwest” podcast could have one-on-one conversations with the agency’s nominated administrators. The primary episode — an interview with former WestJet CEO Gregg Saretsky — was launched final week on platforms together with Apple Podcasts and Spotify. The video model has 3,900 views on YouTube.
Nicely earlier than the primary episode dropped, the airline began making adjustments — and extra are doubtless on the best way. Final month, Southwest launched a dramatic turnaround plan, scrapping its distinctive playbook of greater than 50 years, which included open seating, in favor of turning into an airline that resembles most of its friends.
The airline and Elliott are actually engaged on a settlement that might give the hedge fund illustration with out controlling Southwest’s board, Bloomberg reported on Monday.
Whereas it’s unclear if new episodes of the podcast will nonetheless be launched amid settlement talks, communication strategists instructed Enterprise Insider that Elliott’s novel transfer has advantages, together with cost-effectiveness.
Cheaper and extra direct
Historically, activist traders have communicated straight with traders, as a result of most corporations have 10 to twenty main shareholders who determine their elections, stated Scott Bisang, a founding accomplice of monetary communications agency Collected Methods.
However corporations like Southwest and Disney, which noticed related activist curiosity final yr, have plenty of particular person traders.
“You’ll be able to’t name each retail shareholder, and sending junk mail to each holder a number of instances is pricey,” Bisang stated.
A podcast permits the activist to fully management the content material, in comparison with a media outlet shaping an interview. Shareholders might subscribe to the podcast and get notifications straight, which might create a recurring profit in the event that they watch multiple episode. If a lot of folks subscribe, the activist might gather knowledge and retarget adverts to traders by means of different channels, Bisang stated.
Earlier than the podcast, Elliott rolled out a web site and accounts on Instagram, X, and YouTube.
Cas Sydorowitz, the worldwide CEO of shareholder engagement service Georgeson, stated an activist’s podcast might transcend traders, since staff, clients, and suppliers may additionally pay attention.
“Traders perceive the necessity to talk with shareholders and different stakeholders to garner help for his or her director candidates,” Sydorowitz stated. “Internet hosting a podcast is a brand new and doubtlessly efficient means for an activist to showcase the {qualifications} of their director candidates.”
Podcasts are the brand new activist battleground
Earlier this yr, Disney was caught in a proxy battle in opposition to activist investor Nelson Peltz.
At Disney’s annual assembly in April, shareholders voted to maintain CEO Bob Iger and Disney administration’s board and rejected the activist’s two candidates.
“Whereas Disney did not do its personal podcast sequence final yr, they really marketed closely on leisure podcasts like ‘The City,'” a podcast about Hollywood, Bisang stated.
If the Southwest battle continues, he stated to anticipate direct paid advert campaigns from each side.
“It is no totally different than what we see with a presidential election, besides in a proxy combat, you may goal promoting far more particularly in your investor base versus each voter in a state,” Bisang stated.
Southwest and Elliott didn’t reply to requests for remark.
