Dan Loeb's Third Point Buys Back into Disney Stock
16 August 2022 - 01:28AM
Dow Jones News
By Dean Seal
Dan Loeb said Monday that his hedge fund Third Point LLC, which
liquidated a large stake in Walt Disney Co. this year, has
repurchased a "significant stake" in the company.
The activist investor disclosed the investment in a letter to
Chief Executive Bob Chapek praising growth in Disney's streaming
subscriber base and urging the company to engage with Third Point
on a number of governance issues.
Third Point is pushing Disney to "make every attempt" to buy up
Comcast Corp.'s remaining minority stake in the streaming giant
Hulu before its contractual deadline in early 2024.
"We believe that it would even be prudent for Disney to pay a
modest premium to accelerate the integration but are cognizant that
the seller may have an unreasonable price expectation at this
time," Loeb's letter said.
The letter also states that there is a "strong case to be made"
that Disney should spin off its ESPN business to shareholders in
order to alleviate leverage at the parent company, despite ESPN's
centrality to the company's streaming offerings and the significant
free cash flow it generates.
Loeb's letter also urges the company to institute a cost-cutting
program and continue its pandemic-era suspension of cash dividend
payments.
Third Point previously held 4.1 million shares of Disney and
successfully pushed the company to suspend its $3 billion annual
dividend and plow the funds instead into the streaming
business.
But by the first quarter of this year, the hedge fund had
completely exited its position. Mr. Loeb had become worried that it
would take years for Disney's streaming business to reap the
profits needed to boost the company's share price, a person
familiar with his thinking told The Wall Street Journal in May.
Disney shares gained 1.9% to $123.76 in early trading
Monday.
Write to Dean Seal at dean.seal@wsj.com
(END) Dow Jones Newswires
August 15, 2022 11:13 ET (15:13 GMT)
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