Activist investor Dan Loeb has backed away from calling for Walt Disney Co. to spin off ESPN, saying he has a “better understanding” of the sports network’s potential for the media giant’s global growth.
Loeb’s Third Point LLC acquired a stake in Disney last month and called for changes including the spinoff of ESPN to reduce the parent company’s leverage. After executives at the media giant rejected those calls, the investor tweeted Sunday he looks forward to seeing ESPN head James Pitaro execute on the growth and innovation plans, “generating considerable synergies as part of” Disney.
Chief Financial Officer Christine McCarthy last week played down Loeb’s call, saying Disney views ESPN as a crucial part of its portfolio. Days later, Chief Executive Officer Bob Chapek told the Financial Times that Disney had been approached by multiple parties interested in buying the sports network earlier this year, underlining the network’s “potential.”
Sports are an integral part of Disney’s TV operation, drawing viewers to its ABC network as well as ESPN and its paid online operation ESPN+. Still, the company is facing growing competition in the area, as rival streaming services including those run by Amazon.com Inc. and Apple Inc. add sports to their offerings.
In his letter to Disney last month, Loeb had argued that spinning off ESPN would allow the company to reduce its US$46 billlion debt load. He also called for new board members at the media conglomerate, saying that the board had “gaps in talent and experience as a group that must be addressed.”
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