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 Loeb, whose hedge fund Third
Point bought into Disney during the second
quarter, said the company could double the
programming budget for Disney+ by reallocating a
dividend of a few dollars per share.
"We believe the company should permanently
suspend its $3 billion annual dividend, redirect
capital entirely into content production and
acquisition for Disney’s (direct-to-consumer)
business, centered around Disney+," Loeb wrote
in a letter to Disney Chief Executive Robert
Chapek on Wednesday. Reuters obtained a copy of
the letter.
In May, Disney's board of directors said it
would suspend payment of its semi-annual cash
dividend for the first half of fiscal 2020.
A Disney spokesman did not immediately respond
to a request for comment. The company said in
August that it would hold an investor day in the
coming months to provide an update on its
streaming strategy.
Disney shares rose 1.9% to $123.19 in afternoon
trading on Wednesday.
Loeb added Disney to Third Point's portfolio
some months ago when its shares were beaten down
by worries over how theme parks and movie
theaters would survive the global coronavirus
pandemic.
Disney said in August it had attracted more than
100 million streaming customers worldwide in
just the first nine months of its digital video
push. Netflix boasts 193 million, but it got a
head start in the streaming market 13 years ago.
While Loeb wrote that he did not want to intrude
on Disney’s basic business decisions, he left
little doubt that he wanted the company to move
more quickly to capture streaming subscribers.
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 Even though a more aggressive
investment strategy may weigh on short-term
earnings, Loeb argued that with time, investors
would see a benefit.
"Time is of the essence and the company should
consider significant additional investments in
content, both through production and
acquisitions here and abroad," he wrote.
The letter, first reported by Bloomberg, struck
a conciliatory tone with Loeb saying he looked
forward to a "constructive dialogue" with the
company.
He also urged Disney to embrace home
entertainment as the future, rather than movie
theaters.
"Every Hollywood executive has been able to
enjoy first-run movies in the comfort of their
home for years," Loeb wrote. "We urge you to
democratize this experience and to continue to
embrace the future of home entertainment with
the utmost urgency in executing the company’s
digital transformation."
(Reporting by Subrat Patnaik in Bengaluru, Svea
Herbst-Bayliss in Boston and Lisa Richwine in
Los Angeles; Editing by Maju Samuel, Bernadette
Baum and Chizu Nomiyama)
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