Former Disney CEO hit with lawsuit over streaming losses

A Disney Shareholder is suing Former Disney CEO, Bob Chapek due to allegations of misleading statements about Disney Plus and “the health of the streaming business.”

Deadline reported that a lawsuit was filed in the U.S. District Court for the Central District of California last week. The plaintiff sought a class action lawsuit with a jury, representing those who purchased shares from The Walt Disney Company between Dec 10, 2020, and Nov 8, 2022. This was the period time when Disney missed earning quotas.

A 39-page filing included allegations of “false and/or misleading statements” about Disney Plus and how The Walt Disney Company failed to disclose Disney’s declining subscriber growth. It also accused the company of not being able to reach either subscriber or profitability targets.

“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 Walt Disney Company commented on the lawsuit, and stated that they’re aware and intend to defend it “vigorously.”

“We are aware of the complaint and intend to defend vigorously against it in court’

Back on August 2022, it was revealed that The Walt Disney Company surpassed Netflix in terms of total subscriber count on all their platforms. However, it still has a long way to go if Disney Plus were to match Netflix numbers alone.

Before Chapek departed from the company, Disney’s shares took a nosedive back in early Nov. 2022. It dropped to its lowest point since 2014, which was $86.75 a share. This led to people criticizing Chapek’s leadership, who took the role back in Feb. 2020, alongside the other backlash the former CEO faced from both employees and shareholders after he refused to condemn Floridian Governor Ron DeSantis’ “Don’t Say Gay” bill. In Nov 2022, Chapek stood down from his CEO title and was given back to Bob Iger.