Activist investor no longer pushing Disney to spin off ESPN
CNN
By Frank Pallotta, CNN Business
Dan Loeb is fine with Disney keeping ESPN after all.
The activist investor and Third Point CEO, who made headlines last month when he proposed that the media giant spin off ESPN, had a change of heart over the weekend.
“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 ad and subscriber revenues,” Loeb tweeted Sunday.
He added that Third Point looks forward to seeing ESPN president James Pitaro “execute on the growth and innovation plans, generating considerable synergies as part of The Walt Disney company.”
For years, ESPN was widely considered the crown jewel of Disney’s media empire, but with cord-cutting and the streaming revolution taking place across the entertainment industry, the network has lost some of its luster. But live sports — especially the NFL — are still the most popular programming on TV, so the network’s ad revenue still makes it a valuable piece of the Disney portfolio.
Last month, Third Point bought a new stake in Disney, saying at the time that “Disney’s complex transformation is succeeding” and that the investment firm has “confidence in Disney’s current trajectory.”
However, Loeb also wanted to see five changes at Disney, which he said would “unlock further value in the near-term.”
One change, which got the most attention, was for Disney to ditch ESPN. Loeb noted that “a strong case can be made that the ESPN business should be spun off to shareholders with an appropriate debt load” to reduce Disney’s debt.
“ESPN would have greater flexibility to pursue business initiatives that may be more difficult as part of Disney, such as sports betting,” Loeb added. “Customers of ESPN and sports leagues would be better served by a focused management team driving a leadership position in sports distribution.”
Disney CEO Bob Chapek spoke highly of the cable sports network on Saturday, telling Variety that “the advertising demand for ESPN speaks volumes.”
“But what else speaks volumes is that when the word was out on the street that maybe Disney will spin off ESPN, we had no less than 100 inquiries of people that wanted to buy it,” Chapek added. “What does that tell you? That says we’ve got something really good.”
— CNN Business’ Paul R. La Monica contributed to this report.
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