Disney Shareholders Suing Ex-CEO Bob Chapek

Bob Chapek hasn't been with The Walt Disney Company for the better part of the last six months, but that's not stopping one disgruntled shareholder from filing a lawsuit against the former Disney executive. According to a new filing through the US District Court for the Central District of California on Friday, the suit is seeking judicial determination to become a class action lawsuit against the company. The suit filed alleges Disney violated securities laws for "misleading statements" regarding the financial health of Disney+ and Disney's direct-to-consumer business.

In addition to Chapek, former Disney executive Kareem Daniel is listed as a defendant on the lawsuit (via Deadline), as is current Disney CFO Christine McCarthy.

"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 suit reads in part.

It adds, "(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."

At the root of the suit is a November 8th earnings call in which Disney revealed it fell short of estimations on the revenues of Disney+ and Hulu. At the time, it was revealed Disney had suffered an operating loss of around $1.47 billion during the quarter.

During the company's latest call, it was revealed the subscriber base of Disney+ has continued to dwindle, with the service losing upwards of four million users over the past three months.