Disney is facing another lawsuit from investors, alleging the company is hiding streaming losses. The suit, filed on August 23rd, 2023, list Disney, current CEO Bob Iger, and former CEO Bob Chapek as defendants. The main allegation is that the company has given misleading statements and/or omissions regarding the actual financial state of Disney+.
“To conceal these adverse facts, defendants engaged in a fraudulent scheme designed to hide the extent of Disney+ losses and to make the growth trajectory of Disney+ subscribers appear sustainable and 2024 Disney+ targets appear achievable when they were not,” the shareholder claims. Stourbridge Investments is seeking a jury trial, being represented by their Wilmington, DE and Hewlett, NY lawyers.
The company’s stock has recently sunk to a 9-year low, with shares at a little over $84. While investors have taken the wait-and-see approach during Chapek and Iger’s regimes, it is understandable they’re upset. Chapek’s “pandemic-plagued” reign was mostly focused on the pursuit of subscriptions over profits, which let to him being ousted from the company. Iger was originally brought for a few years to choose a successor, but has had his contract extended to 2026. Iger’s second reign has seen a surge in streaming content spending.
Though stymied to a degree by the WGA and SAG-AFTRA strikes, Iger’s multi-billion-dollar cost cutting has had little effect. Even laying off 7,000 employees hasn’t done much to help the company’s profits. The most recent quarterly results show that streaming losses are at $512 million. Stourbridge is seeking damages, restitution, and has some very specific instructions for the Disney board and executives. Namely taking actions to reform and improve governance and internal procedures to protect shareholders investment from repeat losses.
Representatives for Disney and executives have not responded to the lawsuit at this time.
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