A Disney shareholder is suing the company, along with former CEO Bob Chapek, former executive Kareem Daniel and current CFO Christine McCarthy over allegedly misleading statements about Disney+ and company’s losses in regards to streaming, according to Deadline.
- The lawsuit was filed on May 12th by Local 272 Labor Management Pension Fund on behalf of purchases of Disney shares between December 10, 2020 and November 8, 2022.
- In that time, Disney “dramatically missed earnings guidance” and the company’s stock took a major hit.
- Deadline shared a portion of the complaint, which you can read below:
- Defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (i) Disney+ was suffering decelerating subscriber growth, losses, and cost overruns; (ii) 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; (iii) Disney had made platform distribution decisions based not on consumer preference, consumer behavior, or the desire to maximize the size of the audience for the content as represented, but based on the desire to hide the full costs of building Disney+’s content library; and (iv) Disney was not on track to achieve even the reduced 2024 Disney+ paid global subscriber and profitability targets, such targets were not achievable, and such estimates lacked a reasonable basis in fact.
- The filing specifically cites Disney’s November 8 quarterly financial results, which included an operating loss of $1.47 billion for streaming.
- Disney responded to this lawsuit with a statement:
- “We are aware of the complaint and intend to defend vigorously against it in court.”
- The suit currently seeks a judicial determination to become a class action, plus unspecified damages.
- Deadline explains that “attempted class action suits are filed frequently when share prices fall sharply and often they don’t advance.”
- However, they also explain that this case is different in that it specifically calls out high-profile executives and pertains to the newsworthy streaming losses of Disney.