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A letter seized by CNBC’s David Faber stated that Daniel Loeb’s Third Point has bought a new stake in Disney. Pushing the entertainment giant to spin off ESPN, a sports network. Shortly after the announcement, the shares rose by 2%. Meanwhile, Reuters reported on Monday, the stakes of Loeb are worth around $1 billion.
Loeb in a letter addressed to Bob Chapek, the CEO of Disney, noted that it is highly probable that ESPN should create a separate organization. Loeb said that the segment produced free cash flow for Disney.
Loeb said that ESPN will be highly flexible to carry out business initiatives that are going to be intricate as part of Disney like sports betting. Often the arrangements between the two firms can be lawfully replicated. In a way similar to how eBay spun PayPal. During this process also, eBay didn’t stop utilizing the product for processing payments.
No company is generating revenue than Disney from cable subscribers, just because of ESPN. ESPN and its sister network ESPN2, together charge around $10 per month. Meanwhile, Disney, in order to have ESPN as part of their most popular cable packages, are required to include ESPN.
Last month, Disney announced the rise in the ESPN+ prices, from $6.99 per month to $9.99 per month beginning from August 23. The increase is the highest till date. In addition, Loeb asked the entertainment giant to directly integrate the Disney+ direct-to-consumer platform. Comcast has signed an agreement to sell its 33% stake in Hulu to Disney in two years. Loeb also stated that Disney will try by every means to acquire the remaining minority stake of Comcast before the 2024 deadline.
In the letter, Loeb noted that it would be wise on Disney’s part to pay a modest premium to speed-up the integration. Loeb acknowledged that it is the primary focus of Disney and it expects to have a deal before Comcast is lawfully bound to do so within 18 months. In response, Disney said that the company has experienced constant growth across businesses.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
