Loeb has “better understanding” of ESPN’s importance to Disney and cools on spin-off demands

Activist investor Daniel Loeb has cooled on his demands that Disney spin sportscaster ESPN off into its own standalone business.

Last month, Loeb’s New York-based hedge fund Third Point acquired a US$1 billion stake in Disney – with the investor setting out a list of demands. These included accelerating the timetable for acquiring Comcast’s minority stake in Hulu, fully integrating Hulu into Disney+ and making ESPN its own unit.

However, Loeb has tweeted that he now has a “better understanding” of ESPN’s value to Disney and that it will be “generating considerable synergies as part of” the broader company. 

Loeb’s initial demands had been met by a tepid industry response, with a number of analysts arguing that the move would make little strategic sense. 

Disney CEO Bob Chapek had previously said that the company turned down multiple inquiries from potential suitors for ESPN and praised the overall business. In comments to Reuters, the CEO said: “It’s been a great cash flow generator for us, which is, as we ramp up with streaming, kind of helps pay the bills. It’s very, very positive today, and the most important thing was to always look for the future, right?”

Chapek also confirmed that conversations were ongoing with Comcast over accelerating the Hulu takeover, saying that “it would make sense to them because it’s inevitable.”

In further comments to Los Angeles Times during Disney’s D23 fan event, Chapek said that the company would only consider merging Disney+ and Hulu once the full acquisition had taken place. He said that the company could potentially create a “hard bundle” – similar to Warner Bros. Discovery’s plans for HBO Max and discovery+ – but conceded that “the consumer essentially dictates everything” and its future model would be decided based on what consumers want.