Bob Iger, Bob Chapek, and Disney have been sued by investors over their streaming losses.
According to court documents obtained by Deadline, the Stourbridge Investments company filed a lawsuit on 23 August over what it called “materially misleading statements and/or omissions” the company and top executives made over Disney+ financial affairs.
The suit read, “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.”
Though Stourbridge claimed it was bringing the action forward on Disney’s behalf, it named the company in its complaint along with present CEO Iger, former CEO Chapek, former CFO Christine McCarthy, ex-Disney Media & Entertainment Distribution chairman Kareem Daniels, and more top-level executives.
The company’s most recent quarterly results reported streaming losses at $512 million (£406 million).
“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 Stourbridge Investments suit continued. “Specifically, defendants used the newly created DMED to inappropriately shift costs out of the Disney+ platform and onto legacy platforms.”
Stourbridge instructed in their suit that Iger, Chapek, and others should “take all necessary actions to reform and improve its corporate governance and internal procedures to comply with applicable laws and to protect Disney and its shareholders from a repeat of the damaging events described herein, including, but not limited to, putting forward for shareholder vote”.
– Cover Media