Dan Loeb’s hedge fund Third Point has bought an estimated $1bn stake in Disney and is proposing changes to the company’s structure and management. Third Point wants to see the ESPN sports division (20% owned by Hearst Corp) spun-out of Disney, a full takeover of streaming company Hulu, and a board strengthened by new members.
Third Point had previously bought a stake in Disney in 202 which it sold earlier this year. Disney shares are currently underperforming the market, despite adding almost 15m Disney+ streaming subscribers in the last quarter and having declared its intention to complete the Hulu deal.
Loeb’s letter to the Disney board said there were “gaps in talent and experience as a group that must be addressed”. While he had “confidence” in Disney and thus had repurchased a “significant stake” in the media group, it should cut costs, pay down debt and buy-back shares. He suggested that the spinoff of ESPN would give it the flexibility to expand, for example into sports betting that would be difficult as part of the family-centric Disney entertainment group.
The Wrap said investment analysts were sceptical about the idea of spinning off ESPN. But the mere mention of sports betting may prompt new interest in the possibilities.
