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 On Monday, Disney said it had
restructured its media and entertainment
businesses to accelerate growth of Disney+ and
other streaming services as consumers
increasingly gravitate to digital viewing. AT&T
Inc <T.N> and Comcast Corp <CMCSA.O> have made
similar moves.
Disney is facing pressure from activist investor
Daniel Loeb, founder of hedge fund Third Point,
to increase funding to Disney+ and the rest of
its streaming businesses.
While Loeb applauded Disney's restructuring on
Monday, a person familiar with the hedge fund's
thinking said Third Point is urging Disney to
take more feature films directly to streaming
platforms, or to put them in theaters and on
Disney+ on the same day.
Disney, the company behind blockbuster movie
franchises including "Avengers" and "Star Wars,"
said it was committed to theaters when it
announced the restructuring. The changes
separate creative divisions from the
distribution unit that will send programming to
cinemas, streaming or other platforms, though
Disney said they work in "close collaboration."
Chief Executive Bob Chapek, speaking to CNBC
television, described the shift as "tilting the
scale pretty dramatically" toward streaming.
The coronavirus pandemic has changed consumer
habits and driven more viewers to Netflix Inc <NFLX.O>
and other digital video services. It shuttered
theaters and forced experimentation with release
patterns, upending the traditional practice of
keeping a movie exclusively in theaters for a
window of roughly 90 days before sending it to
other platforms.
To meet the need for fresh streaming content
during a worldwide halt in production, Disney
made its remake of the animated classic "Mulan"
available for purchase in the United States on
Disney+ over the Labor Day weekend, and in movie
theaters in a handful of other countries. It
will debut the Pixar animated movie "Soul" on
Disney+ on Christmas Day, rather than in
theaters in November, as originally planned.
'PARALYZED'
Part of the calculus will hinge on how the
cinema business emerges from the pandemic. There
is concern now about how many movie theaters
will survive. Theater chain AMC Entertainment
Holdings Inc <AMC.N> said on Tuesday it would
run out of cash as early as the end of this year
if conditions did not improve.
"Wonder Woman" director Patty Jenkins is among
dozens of top Hollywood names urging U.S.
Congress to provide financial aid to help
cinemas weather pandemic shutdowns.
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 "Everybody is absolutely
paralyzed and trying to read what is going on at
every level and how that is going to trickle
down into the way people watch movies," Jenkins
said in a recent interview.
The total number of films released annually
already has been falling. Major studios released
124 films in theaters in 2019, down from 147 in
2015, according to the Motion Picture
Association of America. But even
as investors have rewarded Netflix with high
valuations for its single-minded focus on making
content exclusively for subscribers, Wall Street
analysts questioned the financial viability of
traditional studios doing the same.
A premium video-on-demand model like the one
Disney used for "Mulan" will not work for a
studio’s biggest, most ambitious films,
LightShed Partners analyst Rich Greenfield said
in September, noting that a $2 billion
box-office film can generate over $800 million
in profit to a studio. "While we
remain confident that streaming economics in
totality are far superior long-term than
traditional movie/TV economics ... nothing can
achieve the per-picture economics that Disney is
able to generate through a global theatrical
release," Greenfield wrote on Tuesday.
 That "makes it very hard economically for Disney
to pivot away from" current movie windows in
theaters, he said.
Releasing more films that were meant for
theaters directly to streaming "would be a
material step down in content revenues from the
level generated by their current business
structure, but likely even a greater drop in
profits," MoffettNathanson analyst Michael
Nathanson wrote on Oct. 1.
Chapek hinted during a CNBC interview on Monday
that changes to its theatrical model could be
coming. He said details would be unveiled at an
investor presentation on December 10.
(Reporting by Lisa Richwine in Los Angeles,
Helen Coster in New York and Svea Herbst-Bayliss
in Boston; Editing by Kenneth Li and Matthew
Lewis)
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