Justin Solomon | CNBC
Activist investor Dan Loeb has indicated he will withdraw from efforts to get Disney to spin off ESPN, reversing a position he had advocated less than a month ago.
In a tweet Sunday morning, Third Point’s CEO said he sees virtue in keeping the sports network as a separate vertical within the Disney conglomerate.
“We better understand the potential of @espn as a standalone business and another vertical for $DIS to reach a global audience to generate ad and subscriber revenue,” Loeb said.
“We look forward to seeing Mr. Pitaro execute plans for growth and innovation, generating significant synergies as part of The Walt Disney Company,” he added, referring to Disney chairman James Pitaro.
The tweet follows comments from Disney CEO Bob Chapek, who told reporters at the D23 Expo this weekend that he has big plans for ESPN, though he did not elaborate. Chapek told Variety that “we had no fewer than 100 inquiries from people who wanted to buy” ESPN when word got out that it was potentially for sale.
“What does that tell you? It means we have something really good,” he said. “And if you have a strategic plan, a vision of where it’s going to fit in the company over the next 100 years, then you don’t exactly want to give it up.” And we have that plan. We haven’t shared that plan.”
The reversal in Loeb’s position comes after he took a new stake in Disney in the second quarter, valued at about $1 billion, or 0.4 percent of the company. Disney shares are up about 6.5% in the past month. Loeb had stepped down from a previous position at the company when the stock fell as interest rates jumped.
A Disney official insists that ESPN is still considered an integral part of the company.
“As Bob has said, ESPN is an integral part of The Walt Disney Company, and he believes its full potential will continue to be realized as we execute on our strategic vision of being the most trusted brand in sports,” said Christina Sheik, Disney’s chief communications officer. .
At the heart of his drive to spin off ESPN was the belief that the new business could expand into areas including sports betting. He compared it to PayPal’s eBay spinoff “while still using the payment processing product.”
Along with the ESPN question, Loeb urged Disney to bring streaming giant Hulu directly to the Disney+ direct-to-consumer platform. NBC Universal parent Comcast has an agreement to sell its 33% stake in Hulu to Disney in two years. Loeb recommended that Disney “make every effort” to acquire the remaining minority stake before the sale deadline.
“We believe it would even be reasonable for Disney to pay a modest premium to expedite the integration,” Loeb said in a letter. “We know this is a priority for you and we hope to have a deal before Comcast is contractually obligated to do so in about 18 months.”
Disclosure: CNBC is part of Comcast’s NBCUniversal.