NEW YORK, Aug. 16 (BUS) – Hedge fund Third Point unveiled a roughly $1 billion stake in Walt Disney, and said it plans to push the media company to make a series of changes, from converting ESPN sports channel to buyback. Posts and add new board members.
Billionaire investor Daniel Loeb, who runs Third Point, radically changed Disney when he built a new stake in the second quarter, shortly after leaving his position months earlier when concerns about price hikes and faster interest rate hikes sparked a sharp market. Sale, Reuters reports.
Now Third Point, which owns roughly 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 Chuckle, and a list of initiatives he and the board of directors must pursue to boost growth.
“We are so confident in Disney’s current trajectory that in recent weeks we have repurchased a significant stake in the company,” Loeb wrote to Chuckleak in a letter seen by Reuters. Loeb wrote after Disney said its quarterly profit jumped 50% and its streaming subscriptions outperformed Netflix.
Tsheap has faced criticism in Hollywood over a 2021 dispute with Marvel’s “Black Widow” star Scarlett Johansson, and a political firestorm over the company’s response to a new Florida education law, where the company employs about 80,000 people.
Disney was initially silent about the measure, which limits classroom discussion of gender identity and sexual orientation, which drew criticism from that community and some staff. He later condemned the law, prompting Florida Governor Ron DeSantis to level criticism against the Disney Walk.
Loeb wrote that management may already be considering the changes he proposed, including cutting costs, paying down debt, and buying back shares.
He said Disney’s board needs to be modernized, and to find “gaps in talent and experience as a group that need to be addressed.” Loeb said he had identified potential managers but declined to go into details.
Disney said in a statement that it welcomes “the views of all of our investors.” She noted the company’s revenue and profit growth under Chapek’s leadership, adding that its board of directors “has extensive experience in branded business, consumer engagement and technology.”
Active investors often advance their agendas by trying to win seats on the board of directors either through an invitation from the company or by rallying other investors to support directors in a vote.
A key proposal from Loeb includes ESPN, which he believes should be spun for shareholders. He urged Disney to hire bankers and lawyers to “re-evaluate the desirability of the transaction in the current environment” after Disney had already considered it.
An industry trade publication, Puck, reported last year that Disney considered firing ESPN because the network lost cable subscribers. The same publication reported last month that this option is no longer being considered, and that live sports is considered a “core pillar” of the company’s business.
Loeb also suggested that Disney speed up the schedule to buy the remaining stake in Hulu from minority stakeholder Comcast Corp. before the planned acquisition in 2024. This would clear the way for Hulu to be integrated into the Disney+ technology platform and save money.
Disney stock, which has fallen nearly 21% since January, rose 2.2% to $124.21 Monday afternoon. Loeb had previously pushed for changes at companies ranging from Nestlé to healthcare company Baxter International.
Sources said Loeb, like other prominent hedge fund managers, has incurred double-digit losses this year and tried to limit the damage by selling nearly all of the tech names earlier in the year. Third Point has repurchased Disney at a lower level than when it first invested in 2020.