Third Point unveils nearly $1 billion stake in Disney, pushes for change

Aug 15 (Reuters) – Hedge fund Third Point on Monday disclosed a nearly $1 billion stake in The Walt Disney Company (DIS.N) and said it would ask the media company to make a number of changes ranging from shutting down the cable sports channel. planning to inspire. To buy back ESPN shares and add new board members.

Billionaire investor Daniel Loeb, who runs Third Point, made a U-turn on Disney when he built a new stake in the second quarter, not long before exiting his position months earlier, when rising prices and Fear of rapid interest rate hikes gave rise to a bullish market. Sell ​​it

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 from the company’s CEO, Robert Chapek, and one of those initiatives. List what they and the board need. to promote growth.

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“We believe in the current trajectory of Disney

Like we have in recent weeks, repurchased a significant stake in the company,” Loeb wrote to Chapek in a letter seen by Reuters. Subscription overtakes Netflix Read more

Chapek drew criticism over a political storm in Hollywood over a dispute with Scarlett Johansson, star of the 2021 Marvel film “Black Widow,” and the company’s response to a new education law in Florida, where the company employs about 80,000 people.

Disney initially kept quiet about the measure, which limits discussion in the classroom to gender identity and sexual orientation, prompting criticism from that community and some employees. It later denounced the law, causing Florida Governor Ron DeSantis to stand up against “Wok Disney”. read more

Loeb wrote that management is already considering proposed changes, which would include cutting costs, paying down debt and buying back shares.

He added that Disney’s board “needs to be refreshed as a group to find gaps in talent and experience that must be addressed.” Loeb said he has identified potential directors, but declined to elaborate.

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

Activist investors often advance their agenda by trying to win board seats through company invitations or by rallying other investors to support the directors in the vote.

One of Loeb’s key suggestions involves ESPN, which he thinks should be passed on to shareholders. He urged Disney to hire bankers and lawyers to “re-evaluate the desirability of the transaction in the current environment” after considering it beforehand.

Puck, an industry trade publication, reported last year that Disney was considering shutting down ESPN because the network had lost cable subscribers. The same publication reported last month that this option was no longer under consideration, and that live sports are considered the “lynchpin” of the company’s business.

Loeb also proposed that Disney speed up the timetable for buying the remaining stake in Hulu from minority stakeholder Comcast Corp (CMCSA.O) ahead of its planned 2024 acquisition. This will pave the way for integrating Hulu into the Disney+ technology platform and saving money.

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

Sources said that like other prominent hedge fund managers, Loeb has faced double-digit losses this year and tried to limit losses by selling off almost all technology names earlier this year. Third Point bought Disney back in 2020 at a lower level than it invested in the first time.

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Reporting by Svea Herbst-Bellis in Boston and Don Chmilevsky in Los Angeles Editing by Mark Porter and Matthew Lewis

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