Third Point's Loeb takes new Disney stake, touts case for ESPN spin-off, board refresh (updated)

Aug. 15, 2022 12:30 PM ETThe Walt Disney Company (DIS)CMCSABy: Jason Aycock, SA News Editor11 Comments

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Walt Disney (NYSE:DIS) hit its highest point since April Monday morning following the news that Third Point and investor Dan Loeb have taken a new stake, and took the opportunity to suggest that ESPN be spun off from the overall company.

As of 12:30 p.m. Disney stock was up 2.8%, among the top few large-cap gainers among Communication Services stocks.

Loeb sent a letter to Disney (DIS) CEO Bob Chapek encouraging him to make efforts to buy Comcast (CMCSA) out of its remaining minority stake in Hulu before a contractual deadline to do so in early 2024 - even at a "modest premium" to accelerate integration.

(Hulu was once co-owned by Disney, Fox, Comcast and Time Warner, but Disney bought Fox's media assets, and Time Warner sold its stake back to Disney and Comcast. Comcast now holds a one-third interest in the streamer.)

Loeb also says there's a strong case for spinning off ESPN.

Updated: Third Point has filed for Hart-Scott-Rodino approval with the FTC to directly engage with Disney, and it's suggesting refreshing the board to tackle "gaps in talent and experience as a group that must be addressed," adding it's identified potential directors.

Loeb and Third Point have also suggested a cost-cutting program that would include disposal of underperforming assets, as well as suspending the cash dividend and using free cash flow for debt repayment, stock repurchases or organic investments.

Check out the text of Third Point's letter.

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