Disney Urged By Investor Daniel Loeb To Ditch Shareholder Dividend And Use These Funds For Streaming – Deadline
Activist investor Daniel Loeb, whose Third Point has a small stake in Disney, is calling on the media giant to cancel its shareholder dividend and redirect those funds to streaming.
“Aside from bringing additional subscribers to the platform, the increased speed of dedicated content production offers several benefits spread across your existing base, including higher engagement, lower churn, and higher pricing power,” Loeb wrote in one Letter to Disney CEO Bob Chapek.
As Disney faces a number of biblical challenges for its theme parks, movie studios, and media networks due to COVID-19, it has managed to come up with more encouraging numbers for streaming. In August, the company announced that its Disney + service had reached 60.5 million subscribers worldwide and had already met projections in its first five years. However, along with Hulu and ESPN +, the new platform is losing money, and Wall Street analysts are forecasting annual losses of around $ 2 billion.
‘High School Musical: The Musical: The Series’ Getting A Holiday Special
As with other new players like HBO Max and Apple TV +, the budget for content on Disney + is a fraction of the $ 17 billion spend by Netflix, the world’s leading provider of 193 million subscribers.
Even the dividend is unlikely to change the investment outlook dramatically. During its quarterly earnings forecast with Wall Street analysts in May, Disney said it would forego its dividend in the first half to save money. That move should net the company around $ 1.6 billion. In 2018, Disney declared a divident of 88 cents per share and held that level in 2019.
Disney stock rose nearly 2% to around $ 123 on Wednesday after the letter surfaced, although the direct impact of Loeb’s overture is not entirely clear.
In August, Loeb said he held a long position at Disney during the worst of the pandemic damage because he said streaming was a once-in-a-lifetime opportunity for the company to regain its foothold.
In a letter in August, Loeb said streaming is “the greatest market opportunity ever, with potentially $ 500 billion in revenue, spread across a growing market of 750 million broadband households worldwide outside of China and the size of currently addressable Disney’s Markets dwarfs (roughly $ 100 billion between global box offices and theme parks). “