Another Disney Investor Is Suing Bob Iger and Bob Chapek
The current and former Disney CEOs are being sued by an investor over alleged streaming losses.
Current Disney CEO Bob Iger, former Disney CEO Bob Chapek, a slew of former executives, and the Mouse itself have all found themselves embroiled in a new lawsuit over alleged "sleight of hand" accounting measures related to the company's reporting of streaming losses. In the suit unveiled Tuesday, Stourbridge Investments says Disney and its executives have offered "materially misleading statements."
"Plaintiff brings this action derivatively for the benefit of Nominal Defendant Disney against certain of the Company's current executive officers and directors aiming to rectify the Defendants' violations of the Exchange Act and breaches of fiduciary duties for issuing false and misleading statements and/or omitting material information in the Company's public filings and proxy statements from approximately December 10, 2020 to the present," the suit reads. Deadline has a copy of the full lawsuit here.
"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 suit adds. "Specifically, defendants used the newly created DMED to inappropriately shift costs out of the Disney+ platform and onto legacy platforms."
Why is Bob Chapek being sued?
This isn't the first time Chapek has found himself part of lawsuit regarding his brief time atop Disney. Earlier this year, shareholders sued Chapek and Kareem Daniels, his right-hand man at the time, for alleged misleading statements over the condition of Disney+.
"Defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (i) Disney+ was suffering decelerating subscriber growth, losses, and cost overruns; (ii) the true costs incurred in connection with Disney+ had been concealed by Disney executives by debuting certain content intended for Disney+ initially on Disney's legacy distribution channels and then making the shows available on Disney+ thereafter to improperly shift costs out of the Disney+ segment," the first suit read in part.
It added, "(iii) Disney had made platform distribution decisions based not on consumer preference, consumer behavior, or the desire to maximize the size of the audience for the content as represented, but based on the desire to hide the full costs of building Disney+'s content library; and (iv) Disney was not on track to achieve even the reduced 2024 Disney+ paid global subscriber and profitability targets, such targets were not achievable, and such estimates lacked a reasonable basis in fact."
Chapek took control of Disney over from Iger at the height of the pandemic in 2020 and was replaced by his predecessor in a shocking 2022 executive switch.