The Walt Disney Company announced a major strategic reorganization of its media and entertainment business, saying the move would accelerate its direct-to-consumer strategy in light of the success of Disney+.
In a statement, the company said the reorganization would allow its “creative engines” to focus on producing original content for its streaming services and legacy platforms.
Disney is creating a new media and entertainment distribution group responsible for monetizing content. The new group will be led by Kareem Daniel, who was formerly president, consumer products, games, and publishing.
The moves are effective immediately, and Disney expects to transition to financial reporting under the new structure in the first quarter of 2021.
“This is further proof that the direct to consumer model is not only well received, but more critical than ever to Disney’s future,” Trip Miller, a Disney investor and managing partner at the hedge fund Gullane Capital Partners, said. “These moves will not only result in higher quality content, and focused distribution, but allow the company to streamline corporate complexity and hopefully lower expenses.”
The streaming service has grown to more than 60 million subscribers in less than a year as the COVID-19 crisis has closed parks and stalled film production.
“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our company to more effectively support our growth strategy and increase shareholder value,” Disney chief executive Robert Chapek said.
The reorganization comes days after activist investor Dan Loeb said that Disney should permanently suspend its dividend and buy more programing for Disney+ to compete with Netflix and Amazon. In a letter to Chapek last Wednesday, Loeb said the company should redirect the $3 billion dividend entirely into content production and acquisition centered around Disney+.
“We are confident that Disney can build a [direct to consumer] business that will meaningfully exceed its current cable TV and box office revenue streams, but only if the company leans into this opportunity and invests more aggressively,” Loeb said.
The company’s parks, experiences and products group will continue to operate under its existing structure.
Disney stock was up nearly 5% Tuesday morning.