Disney Announces Reorganization Of Media and Entertainment Business
Disney has announced a major reorganization of its media and entertainment business to "further accelerate" its streaming strategy. (DIS currently at $126.30)
"This is further proof that the direct to consumer model is not only well received, but more critical than ever to Disney's future," said Trip Miller, a Disney investor and managing partner at hedge fund Gullane Capital Partners. "These moves will not only result in higher quality content, and focused distribution, but allow the company to streamline corporate complexity and hopefully lower expenses." This move will allow Disney to further monetize in demand content and possibly "make up for revenue and profit lost in other divisions this year."
Under the new structure a group led by Kareem Daniel will be in charge of overseeing the operations of the company's streaming services like Disney+, Hulu and ESPN+ and monetizing that content via distribution and ad sales.
"Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our Company to more effectively support our growth strategy and increase shareholder value," Bob Chapek, Disney's CEO, said in a statement. "Managing content creation distinct from distribution will allow us to be more effective and nimble in making the content consumers want most, delivered in the way they prefer to consume it."
Disney+(less than a year old), now has more than 60 million subscribers a number predicted for 2024.
Dan Loeb, an activist investor, recently said that Disney should permanently suspend its $3 billion in annual dividend payments and invest that money back into Disney+.
"We are confident that Disney can build a [direct to consumer] business that will meaningfully exceed its current cable TV and box office revenue streams, but only if the company leans into this opportunity and invests more aggressively," he said.