Walt Disney restructures entertainment businesses to boost streaming
By Lisa Richwine
(Reuters) - Walt Disney Co announced Monday that it has restructured its media and entertainment businesses to accelerate the growth of Disney + and other streaming services as consumers become increasingly interested in digital television.
As part of the reorganization, Disney will separate development and production of programs from distribution to better meet consumer demands.
The move came days after activist investor Daniel Loeb of the Third Point hedge fund urged Disney to forego a dividend payment and double his programming investment in streaming.
Disney stock rose nearly 5% to $ 130.76 after the close of trading.
The media and theme park company launched the Disney + streaming service in November 2019. It has exceeded its own goals, attracting more than 100 million streaming customers worldwide for Disney +, Hulu and ESPN +.
Streaming pioneer Netflix Inc has 193 million customers, but has built that customer base over the past 13 years.
Loeb had argued that Disney needed to cut its dividend in order to increase spending on new TV shows and movies and to attract new customers faster.
Bob Chapek, Disney's chief executive, said in an interview with CNBC the company plans to increase investment in content but did not say whether it was willing to cut its dividend to fund the strategy.
"By managing the creation of content differently from distribution, we can more effectively and flexibly make the content that consumers want most, and deliver it in the way they prefer to consume," said Chapek, the took over the top position of the company in February, in a separate report statement.
In a statement on Monday, Loeb welcomed Disney's overhaul of its media and entertainment structure.
"We're excited to see Disney focus on the same opportunity that makes us passionate shareholders: we're investing heavily in the (direct customer) business and positioning Disney to thrive in the next era of entertainment "said Loeb.
Under the changes, Disney's Studios, general entertainment and sports business would come under one division, while sales and marketing would come under a separate global entity.
Disney said its creative teams would develop and produce programs for streaming and traditional platforms, and the distribution group would decide where customers would watch them.
Chapek told CNBC that the "centralization" of functions would lead to layoffs, but did not say how many.
Kareem Daniel, formerly president of consumer products, games and publishing, will oversee Disney's new media and entertainment distribution group, the company said.
Alan Horn and Alan Bergman will continue to lead Disney's studio operations, which will manage programming for major franchises including Marvel, Star Wars, Disney Animation and Pixar. Peter Rice will lead the general entertainment program and Jimmy Pitaro will oversee the sport.
AT&T, which debuted the HBO Max streaming service in May, was reorganized in August to bring its film and TV operations under one studio head and better survive the streaming media wars.
Disney said it would hold an investor day on December 10 to hear more information about its strategy.
(Additional reporting by Helen Coster in New York and Ankit Ajmera in Bengaluru; editing by Aurora Ellis, Sam Holmes and Cynthia Osterman)
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