A shareholder is suing Bob Chapek along with former executive Kareem Daniel, current CFO Christine McCarthy and the company itself alleging violations of securities law for misleading statements about Disney+ and the health of the streaming business
Defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: Disney+ was suffering decelerating subscriber growth, losses, and cost overruns; the true costs incurred in connection with Disney+ had been concealed by Disney executives by debuting certain content intended for Disney+ initially on Disney’s legacy distribution channels and then making the shows available on Disney+ thereafter to improperly shift costs out of the Disney+ segment;...
Specifically, the 39-page filing cites a November 8 earnings miss by Disney in its quarterly financial results including “a monumental” operating loss of $1.47 billion for streaming. Disney also reported a decline in its average revenue per Disney+ subscriber.“We are aware of the complaint and intend to defend vigorously against it in court,” a Walt Disney spokesperson told Deadline today.
Attempted class action suits are filed frequently when share prices fall sharply and often they don’t advance. A specialized law firm brings the case on behalf of one or more stockholders, in this case seeking a larger shareholder to join as lead plaintiff, and others holders to adhere to the suit as well. A judge must approve class action status.
While similar in so many ways to so many of shareholder suits, this case is somewhat notable for calling out high profile executives and the streaming red ink that’s been the talk of the entertainment industry for the past year, and continues to grab headlines., a Sunday, with former longtime CEO Bob Iger returning immediately for an encore.
. CFO McCarthy, said to have agitated for Chapek’s removal, spans both regimes and is seen in some circles as possible CEO material herself.Having put a lot of their chips on going digital online, the rest of the industry has struggled with a costly pivot to streaming as linear television viewing continues to decline.
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