The Chief Executive and Chief Investment Officer for a New York-based asset management firm founded in 1995 has called on The Walt Disney Company to make a host of moves to help reinvigorate its stock, which some investors disdain for not having a dividend payment since the end of 2019.
Among the suggestions from Daniel Loeb of Third Point — shaking up the Disney board, jettisoning ESPN and taking 100% ownership of Hulu by acquiring Comcast‘s stake in the OTT platform.
Disney responded. In short, it was a “thank you, but no thank you” statement from the executive leadership.
For investors, Disney’s reply to Third Point appears to be an acceptable one, with DIS trading up $1.18 to $125.44 just after Noon Eastern.
With a healthy rebound from a June 13 dip to $94.34, Disney shares are in rebound mode. But, Loeb wants more.
Perhaps the biggest suggestion from the Third Point leader was a major expense-reduction initiative. As he sees it, Disney’s “costs are among the highest in the industry.” Given these drains on profits, “a strong case can be made that the ESPN business should be spun off to shareholders.” This, Loeb argues, would lessen Disney’s debt.
Regarding Third Point’s suggestion for a shift in the composition of Disney’s board of directors, Loeb noted in a letter sent to the company, “We believe there are gaps in talent and experience as a group that must be addressed.”
What did Disney have to say about that comment from Third Point?
“We welcome the views of all our investors,” it stated. “As our [fiscal] 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.”
Tackling Loeb’s calls for a board shift, Disney continued, “Our independent and experienced Board has significant expertise in branded, consumer-facing and technology businesses as well as talent-driven enterprises. The Board has also benefited from continuous refreshment with an average tenure of four years.”
According to CNBC, Loeb’s Third Point has a $1 billion stake in Disney.
