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Dan Loeb has, in a sense, come home. Like a minor superhero in a Marvel Comics Universe film, his transformation is both complete and, in a cinematic way, that journey has brought him full circle.

Seven years ago, the Third Point chief had forgotten his roots. He’d been in New York too long, become too focused on vulgar matters like making as much money as possible, perhaps a bit too enamored of his own rhetorical and persuasive abilities to force companies to do what they didn’t want to do but which he wanted them to do. And thus, this child of Los Angeles had decided that the pictures business was a mug’s game best gotten out of as quickly and completely as possible.

But instead of the capitulation to which he was accustomed, Loeb instead faced a crisis: Sony wasn’t selling, some guy from Kentucky was calling him a carpetbagger, and he was blacklisted from all the best Hollywood parties.

It took a while, but Loeb eventually realized that George Clooney was right: There was magic in the movies. They were the business worth being in, and sod the rest! Sure, Sony still wasn’t listening, but the important epiphany had occurred: Content was king.

Which brings us to our denouement: Not only should money be spent on making movies and television shows—but money that could otherwise be returned to shareholders, the sort of returns Loeb only opposes when he is not a beneficiary of them, his money.

Activist investor Dan Loeb is asking Disney Chief Executive Officer Bob Chapek to end the company’s annual $3 billion dividend to divert more capital to new Disney+ content…. Loeb argues that Disney shares can trade more similarly to Netflix if it can demonstrate its best-in-class status in streaming and bust out of the pack of traditional U.S. media companies….

“By reallocating a dividend of a few dollars per share, Disney could more than double its Disney+ original content budget,” Loeb wrote. “The ability to drive subscriber growth, reduce churn, and increase pricing present the opportunity to create tens of billions of dollars in incremental value for Disney shareholders in short order, and hundreds of billions once the platform reaches larger scale….”

“A more aggressive content roadmap will distinguish Disney as the only traditional US media company able to thrive in a world beyond the box office and the cable TV ecosystem, alongside digital-first businesses like Netflix and Amazon,” Loeb wrote.

We know a place Disney could get some extra content. It’s not content anyone wants, but that doesn’t seem to stop Netflix from thriving.

Activist investor Dan Loeb calls on Disney to end its $3 billion annual dividend and use the funds for Disney+ content [CNBC]


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