Yesterday we reported that activist investor Dan Loeb, CEO of Third Point Management, had sent a letter to Disney CEO Bob Chapek, explaining their “significant stake” in the company and encouraging Disney to make a series of changes to cut costs and generate cash flow.
Some of those changes include:
- A cost-cutting program that addresses margins and “the disposal of excess underperforming assets.”
- Preserving a suspension of its dividend initiated during the COVID-19 theme park closures and using free cash flow to pay down debt, repurchase shares or organically reinvest in the business
- Acquiring Comcast’s 33% minority stake in Hulu prior to its contractual deadline in early 2024 and integrating the streaming service into Disney+Spinning off sports network ESPN
- Refreshing the company’s board with members who have experience in technology, advertising, and consumer engagement.
Today we’ve discovered that The Walt Disney Company has issued a response to this letter. Disney is a company that tends to be confident in it’s business decisions and isn’t afraid to say so. Anyone who has ever set an unhappy email to Disney will find their response to Loeb familiar.
The statement reads:
“We welcome the views of all our investors. As our third quarter results demonstrate, The Walt Disney Company continues to deliver strong financial results powered by world-class storytelling and our unique and highly valuable content creation and distribution ecosystem. Under the leadership of Bob Chapek, the company has delivered this strong performance while navigating the Covid-19 pandemic and its aftermath, including record streaming subscriptions and the reopening of our parks, where we have seen strong revenue and profit growth in our domestic parks business.”
The statement gives off a serious “Thanks but no thanks” tone. Interestingly, it also reaffirms confidence in a Disney CEO Bob Chapek, who remains highly unpopular with investors and fans alike.
This isn’t the first time Third Strike has created waves in the entertainment world. They famously butted heads with both Sony and then with actor turned philanthropist George Clooney. It will be interesting to see how the drama between Disney and Loeb plays out.