Activist investor Dan Loeb, head of the Third Point hedge fund, has called for consideration of sweeping changes at Disney, including spinning off ESPN, a shake-up of its board, cost-cutting, and taking full control of Hulu and integrating it into the Disney+ service.
The Financial Times and Deadline report that in a letter sent today to Disney CEO Bob Chapek, Loeb says Disney’s “costs are among the highest in the industry” and spinning off ESPN would “have greater flexibility to pursue business initiatives that may be more difficult as part of Disney, such as sports betting.”
He adds that most arrangements between the two companies can be replicated contractually and compares it to “the way eBay spun PayPal while continuing to utilize the product to process payments.”
Comcast is slated to sell its 33% stake in Hulu to Disney in 2024, but Loeb called for Disney to make ‘every attempt’ to close that deal sooner. Buying out Comcast would enable Disney to merge Hulu into Disney+, a move that has been long anticipated by media investors.
Loeb says: “We believe that integrating Hulu directly into the Disney+ DTC platform will provide significant cost and revenue synergies, ultimately reigniting growth in the domestic market.”
Disney has since responded to the letter, saying: “We welcome the views of all our investors” and pushed back against Loeb’s call for a refresh of its executive board.
