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Wednesday, October 21, 2020

Disney Reorganizes To Prioritize Streaming

Topline

Disney announced Monday that it will restructure its media and entertainment divisions to prioritize streaming, following similar moves by NBCUniversal and WarnerMedia as the coronavirus pandemic has shaken up the entertainment industry. 

Key Facts

Disney will create content groups for its major film franchises, general entertainment and sports and will centralize its media businesses into one organization responsible for content distribution, ad sales and its streaming service Disney+. 

Disney CEO Bob Chapek said the creative team will focus on making content and the new “centralized global distribution team” will focus on delivering and monetizing the content across all platforms. 

Chapek said the move follows the success of Disney+ and furthers Disney’s plans to “accelerate” its direct-to-consumer business.

Disney’s programming arms such as its movie and television studios will focus on creating content that is optimal for streaming, not just for movie theaters and TV networks. 

This new structure is effective immediately.

Further Background

Last week, activist investor Daniel Loeb reportedly urged Chapek to end the company’s annual $3 billion dividend to funnel more money into new Disney+ content, according to CNBC, which obtained a copy of the letter. Loeb, whose firm Third Point Capital is one of Disney’s largest shareholders, argued that Disney could more than double it’s Disney+ content budget by reallocating dividends which could boost subscriber growth, reduce churn and increase pricing. Loeb argued the strategy could “create tens of billions of dollars in incremental value for Disney shareholders in short order, and hundreds of billions once the platform reaches larger scale.” NBCUniversal and WarnerMedia have both restructured to focus on their respective streaming services Peacock and HBO Max.  

Further Reading

Announcement

Disney Moves to Reorganize Entertainment Operations (Wall Street Journal)

Activist investor Dan Loeb calls on Disney to end its $3 billion annual dividend and use the funds for Disney+ content (CNBC)

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