Disney clapped back at activist investor Dan Loeb’s suggestion the Mouse House spin off cable sports channel ESPN and criticism over its board of directors.
Loeb, whose firm Third Point re-upped its stake Monday, made a string of suggestions — including spinning off ESPN, sharing buybacks, buying its remaining stake in Hulu and naming new board members — to improve the company’s fortunes.
“We welcome the views of all our investors,” replied a Disney spokesman. “As our 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.”
Shares of Disney, which opened Monday at $121, rose nearly 3% in midday trading.
In his letter, Loeb took aim at Disney’s financials and its board, saying there are “gaps in talent and experience as a group that must be addressed” and added that Third Point has identified potential directors.
The investor wrote that while his firm has “confidence” in Disney and thus repurchased a “significant stake” in Disney, the media giant should cut costs, pay down debt and buy back shares.
Disney slammed Loeb, first addressing its balance sheet, then its board.
“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,” the spokesman said.
The rep added that Disney’s board has “significant expertise in branded, consumer-facing and technology businesses as well as talent-driven enterprises,” and that board members are cycled out on average every four years.
The response came hours after Loeb said he thinks ESPN should be spun off to shareholders. He urged Disney to hire bankers and lawyers to “reassess the desirability of the transaction in the current environment” after Disney had already considered it.
Last year, Puck News reported that Disney was considering an ESPN spinoff, but the Mouse House slapped down those rumors, calling Puck’s report “inaccurate.”
Loeb also proposed that Disney speed up its timetable for buying the remaining stake in Hulu from minority stakeholder Comcast ahead of the planned 2024 acquisition. This would clear the way for Hulu to be integrated into the Disney+ technology platform and save money.
On Monday, Loeb made a U-turn on Disney by buying a stake in the second quarter — not long after he liquidated the firm’s position in Disney during the first quarter.