Justin Solomon | CNBC
Activist investor Dan Loeb indicated he was going to back down from his push to separate Disney from ESPN, reversing the position he pushed for less than a month ago.
In a tweet on Sunday morning, the Third Point CEO said he sees the merits of having the sports network as a separate vertical within Disney’s group.
“We have a better understanding of @espn’s potential as a standalone business and another vertical for $DIS to reach a global audience to generate advertising and customer revenue,” Loeb said.
“We look forward to seeing Mr. Pitaro execute on the growth and innovation plans that are creating great synergy as part of The Walt Disney Company,” he said, citing Disney Chairman James Pitaro.
The tweet follows comments from Disney CEO Bob Chapek, who told reporters at the D23 Expo later this week that he has big plans for ESPN, though he didn’t reveal details. Chapek told Variety That “we had no less than 100 inquiries from people who wanted to buy” was potentially up for sale when word hit ESPN.
“What does that tell you? It says we have something really cool,” he said. “And if you have a strategic plan, a vision of where it fits into the company in the next 100 years, you really don’t want to tear yourself away from that. And we have that plan. We put that plan in place. not shared.”
Loeb’s situation turned upside down when he took a new stake in Disney in the second quarter, which was valued at about $1 billion, or 0.4% of the company. Disney shares have gained nearly 6.5 percent in the past month. Loeb exited from his earlier position in the company when the stock declined due to a rise in interest rates.
At the heart of their push to differentiate ESPN was the belief that the new business could expand into areas including sports betting. He compared it to the eBay spinoff of PayPal “while continuing to use the product to process payments.”
With the ESPN issue, Loeb urged Disney to bring streaming giant Hulu directly to the Disney+ direct-to-consumer platform. NBC Universal parent Comcast has signed a deal to sell 33% of its Hulu stake to Disney over two years. Loeb recommended that Disney “make every effort” to acquire the remaining minority stake before the sale deadline.
“We believe it would be prudent for Disney to pay even a modest premium to accelerate integration,” Loeb said in a letter. “We know this is a priority for you and hope to have a deal in place before Comcast has contracted it in about 18 months.”
CNBC has reached out to Disney for comment.
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