Walt Disney Co announced a restructuring of its media and entertainment business to accelerate the growth of Disney + and other streaming services as consumers gravitate towards digital content.
As part of business restructuring, Disney will separate software development and production from distribution to better respond to consumer needs.
The move was taken a few days after the investor activist Daniel Loeb from hedge fund Third Point urged Disney to stop paying dividends and double its programming investment in streaming.
Disney Shares Up Nearly 5% After Trading Close To $ 130.76.
The media giant and theme park creator launched the Disney + streaming service in November 2019. He exceeded his goals by attracting over 100 million streaming customers worldwide to his Disney +, Hulu and ESPN subscriptions. +.
Video streaming pioneer Netflix Inc boasts 193 million users, but its customer base has grown significantly in 13 years..
Loeb says Disney needs to cut dividends to increase spending on new TV shows and movies to attract new customers faster.
Disney CEO Bob Chapek said in an interview with CNBC that the company plans to increase its investment in content, but did not say if it is ready to cut its dividend to fund this strategy..
«Managing content creation other than distribution will allow us to be more efficient and flexible in ensuring that the content that consumers want most is delivered to them in the way they prefer to consume it.», – said Chapek, who took up a leadership position in the company in February.
In a statement Monday, Loeb welcomed Disney’s redevelopment of media and entertainment businesses..
«We’re delighted to see Disney focus on the same opportunity that makes us such active shareholders: major business investments (direct to consumers), positioning Disney as a thriving business for the next period of the entertainment era.», – said Loeb.
With the changes being made, Disney Studios’ entertainment and sports business will become one division, while distribution and commercialization will be spun off into a separate global division..
Disney said its creative teams will design and produce software for streaming and traditional platforms, while the distribution team will decide where customers will ultimately see them..
Chapek said in an interview with CNBC that as a result «centralization» functions, layoffs are coming, but did not say exactly how many employees will be laid off.
Karim Daniel, former President of Consumer Products, Games and Publishing, will oversee Disney’s New Media and Entertainment Distribution Group.
Alan Horn and Alan Bergman will continue to run Disney Studios, which will manage programming for major franchises including Marvel, Star Wars, Disney animation and Pixar. Peter Rice will take under the patronage of entertainment programs, and Jimmy Pitaro will oversee sports.
AT&T, which introduced HBO Max streaming service in May, reorganized in August to merge its film and television operations under one studio to better compete for streaming media audiences..
Disney Says It Will Hold Investor Day Dec 10 To Provide More Information On Its Strategy.