Disney boss rejects Dan Loeb’s calls to create ESPN
Bob Chapek, chief executive of Walt Disney, has rejected calls from activist investor Dan Loeb to sell or spin off sports television network ESPN, promising to restore the company to its status as the company’s growth engine.
Loeb, whose hedge fund Third Point revealed in August that he had bought a $1 billion stake in the company, called for ESPN to be spun off to reduce Disney’s indebtedness – just one piece of a puzzle. vast plan to shake up the media society.
In an interview with the FT, Chapek said Disney had been “inundated” with interest from companies looking to buy ESPN earlier this year amid rumors the company was considering selling the cable network.
“If everyone wants to come in and buy it . . . I think that says a lot about its potential,” Chapek said. “I think its potential is within the Disney company.”
ESPN broadcasts live sports in the United States, including games from the National Football League, National Basketball Association and Major League Baseball.
“We have a plan for this that will put ESPN back on its growth trajectory,” Chapek said. “When the rest of the world knows what our plans are, they will be as confident as we are about this proposal.”
Chapek said he has “regular conversations” with Loeb, who also took a stake in Disney in 2020 which he sold earlier this year. He called the conversations “very collaborative, non-adversarial and collegial,” particularly around Loeb’s recommendations to change the composition of Disney’s board of directors.
He defended the board, saying the average tenure is four years and he has a “wide range of skills”.
But he added: “We’re so consistent with Dan’s thinking that everything he’s talked about is either things we’ve considered in the past or we’re considering for the future.”
Loeb has also asked Disney to buy Comcast’s 33% stake in streaming service Hulu by January 2024, when Disney will have the option to buy the remaining stake. Some Wall Street analysts are also calling on Disney to settle ownership of Hulu soon.
Chapek said he would “love” to settle the matter sooner, but Comcast seemed reluctant.
“We’ve spoken to them many times over the past year and more,” he said. “If that was in the cards we’d love to do it, but it takes two to tango.” He noted that market sentiment had changed significantly since the deal was struck, when investors were more bullish on streaming.
Chapek spoke on the sidelines of the annual D23 conference in Anaheim, Calif., where the company unveiled its stream and movie slate to thousands of Disney fans. Disney has unveiled the trailers for two highly anticipated movies coming this fall, the sequel to Black Panther wakanda forever and Avatar: The Way of the Water.
It also premiered a slew of original series on Disney Plus, including the Star Wars prequel Andor and the Marvel series Secret Invasion.
Chapek said the new roster represented the end of a Covid-induced production bottleneck. “This is our new steady state (of production),” he said, saying the pace of production and the size of his content budget – currently around $30 billion – would remain stable.
Disney has continued to add new customers to its streaming services this year, and in some ways its overall streaming operations have overtaken Netflix in subscriber count. But Netflix’s revelation that it has lost more than a million subscribers this year has cast a cloud over the entire streaming business, with investors growing concerned about high content spending and claiming a clear path to profitability.
Disney’s theme park business is also recovering strongly despite park closures in China, analysts said. But stocks are down 26.5% this year, compared to a 15.2% decline for the S&P 500.
Chapek said Disney had “enviable business momentum” in both its content and theme park businesses, but was suffering from investor “unease” around streaming due to Netflix’s troubles.
“For a long time, we profited from being like Netflix because we were a streaming company,” he said. “It’s no wonder we’re painted with the same brush [but] we are not the same company.