Elliott Investment Management launched a podcast to influence Southwest Airlines shareholders. Activist investors own 11% of Southwest Airlines and are calling for a top-level reorganization. Podcasts offer a cheaper and more controlled form of communication that can potentially reach individual investors.
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Last week, activist firm Elliott Investment Management launched a podcast as part of an effort to influence Southwest Airlines shareholders.
Elliott, which acquired an 11% stake in the US airline, recruited a new CEO and board members. The company also directed Southwest to review its operations and develop a plan to improve its performance.
Southwest Airlines stock has lost nearly half its value over the past five years, and passenger numbers are below pre-pandemic levels despite strong travel demand. Earnings took a hit because Southwest Airlines didn’t optimize summer demand and faced overstaffing from Boeing’s aircraft delivery delays, company executives said on an earnings call in July.
Southwest CEO Bob Jordan has been with the company for 30 years and was named CEO in 2022. Mr Elliott said Mr Jordan and Chairman Gary Kelly were responsible for the company’s poor performance.
Activist hedge funds launched a national campaign against Southwest’s management in June, calling for a Dec. 10 shareholder vote to select eight candidates for Elliott’s board.
Southwest’s board of directors is comprised of 15 members, with 13 independent members, according to the filing. The company announced last month that it intended to appoint four new independent directors, which could include some of the board members proposed by Mr. Elliott.
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Elliott said his “Stronger Southwest” podcast will include one-on-one conversations with directors appointed by the company. The first episode, an interview with former WestJet CEO Greg Saretzky, was released last week on platforms including Apple Podcasts and Spotify. The video version has been viewed 3,900 times on YouTube.
The airline started making changes long before the first episode aired, and more changes are likely to come. Southwest Airlines announced a dramatic restructuring plan last month, scrapping more than 50 years of unique strategies including open seating in favor of becoming an airline much like its peers.
The airline and Elliott are currently working on a settlement that would give the hedge fund representation without controlling Southwest Airlines’ board of directors, Bloomberg reported on Monday.
It’s unclear whether new episodes of the podcast will be released amid settlement negotiations, but communications strategists told Business Insider that Elliott’s innovative move has benefits, including cost-effectiveness.
cheaper and more direct
Scott Bisan, founding partner at financial communications firm Collected Strategies, said activist investors have traditionally He has been in direct communication with.
But companies like Southwest Airlines and Disney, which attracted similar activist attention last year, have many private investors.
“You can’t call every individual shareholder, and it’s expensive to send multiple direct mails to every shareholder,” Bisan said.
Compared to news organizations shaping interviews, podcasts give activists complete control over the content. Shareholders can subscribe to the podcast to receive notifications directly and may receive recurring rewards when they listen to multiple episodes. If enough people subscribe, Bisan said, activists can collect data and retarget ads to investors through other channels.
Before the podcast, Elliott published websites and accounts on Instagram, X, and YouTube.
Kath Sidrowitz, global CEO of Georgeson, a shareholder engagement services company, said activist podcasts can reach beyond investors because employees, customers and suppliers may also listen to them. He said it could be expanded.
“Investors understand the need to communicate with shareholders and other stakeholders to gain support for director candidates,” Sidrowitz said. “Hosting a podcast is a new and potentially effective way for activists to highlight the qualities of board candidates.”
Podcasts are the new battleground for activists
Earlier this year, Disney became embroiled in a proxy battle with activist investor Nelson Peltz.
At Disney’s annual meeting in April, shareholders voted to retain Chief Executive Officer Bob Iger and Disney executives on the company’s board of directors, rejecting two activist nominees.
“Disney didn’t produce their own podcast series last year, but they actually promoted it heavily with entertainment podcasts like ‘The Town,’ a podcast about Hollywood,” Bisan said.
He said he expected direct paid advertising campaigns from both sides if fighting continued in the southwest.
“Aside from the proxy contests, this is no different than what you see in a presidential election. You can target your ads much more specifically to your own investor base rather than all voters in a state. ” Bisan said.
Southwest and Elliott did not respond to requests for comment.
