Third Point Reveals Nearly $1 Billion Disney Stake, Demands Changes

Aug 15 (Reuters) – Hedge fund Third Point on Monday disclosed a roughly $1 billion stake in Walt Disney Co (DIS.N) and said it planned to push the media company to bring a series of changes, ranging from splitting off cable sports channel ESPN to buying back stock and adding new board members.

Billionaire investor Daniel Loeb, who runs Third Point, made a U-turn on Disney when he created a new stake in the second quarter, shortly after leaving his post months earlier, when fears of a Rising prices and a faster rise in interest rates triggered a spiked market. clearance sale.

Now Third Point, which owns about 0.4% of the company known for its theme parks and movies like “Aladdin” and “Frozen,” is back with praise for the company’s CEO, Robert Chapek, and a list of initiatives he and the board should pursue to boost growth.

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“Our confidence in Disney’s current trajectory is

so we have, in recent weeks, bought out a significant stake in the company,” Loeb wrote to Chapek in a letter seen by Reuters. Loeb wrote after Disney said quarterly profit jumped 50% and its streaming subscriptions surpassed those of Netflix.

Chapek weathered criticism in Hollywood over a 2021 dispute with Marvel ‘Black Widow‘ star Scarlett Johansson and a political storm over the company’s response to a new education law in Florida, where the he company employs some 80,000 people.

Disney initially kept quiet about the measure, which limits classroom discussions about gender identity and sexual orientation, drawing criticism from that community and some employees. He later condemned the law, forcing Florida Governor Ron DeSantis to speak out against “Woke Disney.” Read more

Loeb wrote that management may already be considering the changes he is proposing, including cost reductions, debt repayment and share buybacks.

He said Disney’s board needs to be refreshed, finding “gaps in talent and experience as a group that need to be filled”. Loeb said he had identified potential administrators but declined to give further details.

Disney said in a statement that it welcomes “the views of all of our investors.” He noted the company’s revenue and profit growth under Chapek’s leadership, adding that its board “has significant expertise in branded, consumer-facing and technology businesses.”

Activist investors often push their agendas by trying to win board seats either through a company invitation or by rallying other investors to support the directors in a vote.

A major suggestion from Loeb concerns ESPN, which he says should be passed on to shareholders. He urged Disney to hire bankers and attorneys to “reassess the advisability of the transaction in the current environment” after Disney had already considered it.

Industry trade publication Puck reported last year that Disney considered parting ways with ESPN as the network lost cable subscribers. The same publication reported last month that this option was no longer being considered and that live sports are seen as a “backbone” of the company’s business.

Loeb also proposed that Disney accelerate the timetable for buying the remaining stake in Hulu from minority shareholder Comcast Corp before the planned acquisition in 2024. This would pave the way for Hulu to be integrated into the Disney+ technology platform and would save money.

Disney stock, which has fallen about 21% since January, rose 2.2% to $124.21 on Monday afternoon. Loeb has previously pushed for changes at companies ranging from Nestle SA (NESN.S) to healthcare company Baxter International Inc (BAX.N).

Like other top hedge fund managers, Loeb suffered double-digit losses this year and tried to limit the damage by selling nearly every tech name earlier in the year, sources said. Third Point acquired Disney at a lower level than when it first invested in 2020.

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Reporting by Svea Herbst-Bayliss in Boston and Dawn Chmielewski in Los Angeles Editing by Mark Porter and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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