Disney (DIS) To Restructure Media And Entertainment Divisions

By Amit Chowdhry ● October 13, 2020
  • Walt Disney Co (NYSE: DIS) announced it is restructuring the media and entertainment divisions at the company to emphasize more on its streaming platforms

Walt Disney Co (NYSE: DIS) announced it is restructuring the media and entertainment divisions at the company in order to emphasize more on its streaming platforms and to further accelerate the direct-to-consumer strategy. And the company’s media operations will be consolidated into a single organization to oversee content distribution, advertising sales, and streaming platforms.

This change comes as Disney has been hit hard by the coronavirus pandemic. Due to theaters being shut down, the revenue from Disney’s films has been slowing down. And less people have been able to go to the Disney parks and cruises over the past year.

Currently, Disney has 100 million paid subscribers across its platforms. And more than half of that figure are Disney+ subscribers.

“I would not characterize it as a response to Covid,” said Disney CEO Bob Chapek in an interview with CNBC. “I would say Covid accelerated the rate at which we made this transition, but this transition was going to happen anyway.”

Activist investor Dan Loeb recently wrote a letter to Chapek calling for an end to the company’s $3 billion dividend in order to spend more on Disney+ content. Loeb’s Third Point Capital is one of the largest Disney shareholders.

“We are pleased to see that Disney is focused on the same opportunity that makes us such enthusiastic shareholders: investing heavily in the DTC business, positioning Disney to thrive in the next era of entertainment,” explained Loeb in a statement to CNBC.

Activist investor Dan Loeb recently wrote a letter to Chapek calling for an end to the company’s $3 billion dividends in order to spend more on Disney+ content. Loeb’s Third Point Capital is one of the largest Disney shareholders.

“We are pleased to see that Disney is focused on the same opportunity that makes us such enthusiastic shareholders: investing heavily in the DTC business, positioning Disney to thrive in the next era of entertainment,” explained Loeb in a statement to CNBC.

With the reorganization, Disney promoted Kareem Daniel, who is the former president of consumer products, games and publishing. Now Daniel will oversee the new media and entertainment distribution group.

Going forward, Alan Horn and Alan Bergman will remain in charge of the studios at the company. And Peter Rice will continue to lead the company’s general entertainment group and James Pitaro will remain as the head of the company’s sports content.

The parks, experiences and products unit will remain under Josh D’Amaro. And Rebecca Campbell will remain as the chairman of direct-to-consumer and international operations. Campbell is going to report directly to Chapek for international operations and report to Daniel for Disney+, Hulu, and ESPN+ initiatives.

“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,” added Chapek in a company 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.”

This new structure went into effect immediately. And the new units will be reflected in Disney’s first-quarter report, expected to happen in February 2021.

Disclosure: I have a small position of Disney in my portfolio