Dan Loeb urges Disney to digitalize.
The 58-year-old billionaire activist investor submitted a letter to Mickey Mouse company, urging it to “permanently suspend” its $3 billion annual dividends and instead to invest the funds to acquiring and producing content for its Disney+ streaming service.
Dan Loeb’s Third Point owns less than 1% of Disney and the activist investor believes that the billions in annual shareholder dividends would be better invested in the company’s direct-to-consumer streaming service.
“the billions in annual shareholder dividends would be better invested in the company’s direct-to-consumer streaming service”
WEALTH TRAINING COMPANY
Dan Loeb urges Disney to digitalize with an emphasis on its streaming service and he thinks such a move could more than double Disney+’s budget for original content
Disney said its quarterly earnings were hit hard as the pandemic emptied theme parks.
The entertainment giant said it lost $4.7 billion on revenue of $11.8 billion — about half of the amount of money it took in during the same period last year.
“Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses” Disney Chief Executive Bob Chapek said in an earnings release for the quarter ending June 27.
The company has more than 100 million paid subscribers in what Chapek touted as a “significant milestone” affirming the company’s move to streaming its coveted content direct to homes.
“Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses”
BOB CHAPEK (Disney Chief Executive)
Dan Loeb urges Disney to digitalize as he notifies Third Point investors that he opened a new position in the Walt Disney Company during the second quarter based in part on the global media giant’s decision to enter the streaming market
Dan Loeb’s started building his long position in Disney when the stocks sank on fears that theme park and movie theatre closures due to the 2020 pandemic lockdowns would send the company’s revenue into a tailspin and losses spiraling. That it did do with losses of $4.7 billion based on half the revenue compared with 2019 second-quarter results.
“Streaming is Disney’s biggest market opportunity ever with potentially $500 billion of revenue” – Dan Loeb
The billionaire activist investor believes those losses overshadow streaming opportunities as Dan Loeb urges Disney to digitalize
“Streaming is Disney’s biggest market opportunity ever with potentially $500 billion of revenue” said Dan Loeb.
But the potential half-trillion-dollar streaming opportunities have also got other giants scrambling to get a slice of the action. Amazon, HBO, NBC, Hulu are all trying to win market share from streaming giant Netflix with various low-cost offerings.
Dan Loeb urges Disney to digitalize but he talks about wanting to maintain “a constructive dialogue” with the company
But that is a slightly less aggressive tone from previously for the billionaire activist investor Dan Loeb. Meanwhile, Disney stock investors are still waiting patiently for their joyride.
The stock rose less than 1% on the news, of Dan Loeb’s investment in Disney. Investors are betting that Dan Loeb’s involvement might transform the dividend-paying media giant into more of a growth company.