With a recent investment in Disney, the hedge fund Third Point calls for reforms | Paragon Alpha

With a recent investment in Disney, the hedge fund Third Point calls for reforms

By Matea Gucec

Daniel Loeb's $1 billion hedge fund, Third Point, has purchased a $1 billion stake in Walt Disney Co. and is pressuring the firm to implement a number of changes.

According to CNBC, these adjustments include asking Disney to separate ESPN and incorporate streaming service Hulu into the Disney+ direct-to-consumer platform.

In a letter to Disney CEO Bob Chapek, Loeb argued that the ESPN division should be spun off since it would significantly increase Disney's free cash flow.

According to the letter acquired by CNBC, Loeb stated that "ESPN would have greater flexibility to pursue economic concepts that may be more difficult as part of Disney, such as sports betting." We think that the majority of the agreements between the two businesses can be recreated contractually, much to how eBay spun off PayPal while still using the service to process payments.

According to Reuters, Loeb also suggested that Disney purchase the last remaining share in Hulu from minor shareholder Comcast Corp. before the previously established 2024 deadline. He said that doing so would lower costs and enable Hulu to be integrated into the Disney+ technological platform.

In response to Loeb, Disney released a statement claiming that business-wide financial growth has persisted.

Disney stated, "We embrace the opinions of all our investors. "As our third quarter results show, The Walt Disney Co. continues to achieve excellent financial results supported by world-class storytelling and our distinctive and highly valuable content production and delivery ecosystem," said the company's financial results.

The company continued, "Our independent and seasoned board has substantial knowledge in branded, consumer-facing, technology, as well as talent-driven organizations. The board has also benefited from ongoing renewal, with a term of four years on average.


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