Disney Investors Sue the Company Over Bob Chapek’s Disney+ Strategy

Bob Chapek standing in front of the Disney Castle which is illuminated with fireworks

Disney investors have filed a lawsuit against the company, largely targeting ex-CEO Bob Chapek’s “cost-shifting” approach to Disney+.

Disney’s investors are taking aim at Ex-CEO Bob Chapek and the corporation at large as they file a lawsuit suggesting the company obscured how much money it was losing on Disney+.

Per The Hollywood Reporter, the suit was filed in California federal court and accuses Chapek of misleading investors regarding the state of Disney+ by hiding information about the streaming service’s costs and profitability. Specifically, the case calls out the ex-CEO’s “cost shifting scheme” which saw original programming premiering on “legacy TV networks” as a means to obfuscate Disney+’s “suffering decelerating subscriber growth, losses, and cost overruns.” Chapek’s strategy was implemented during the beginning and height of the COVID-19 pandemic and saw the company place a heavy emphasis on streaming due to the closure of theaters and its own theme parks.


Related: Disney+ Will Start Removing Content Soon

The accusation against Chapek note that the ousted executive claimed Disney+ was on track to be profitable by the end of 2024, a claim that was reportedly achieved by launching projects such as Doogie Kameāloha, M.D. and The Mysterious Benedict Society on the Disney Channel. “By doing so, a significant portion of the marketing and production costs of the shows were shifted away from Disney+ and on to the legacy platform,” reads the suit. Another major aspect of the suit highlights Chapek’s Disney Media and Entertainment Distribution (DMED) group, a controversial reorganization that placed the job of monetization under the jurisdiction of Kareem Daniel rather than “creative content-focused executives.”

In a statement, Disney confirmed that it will be fighting against the complaint and will be defending against it “vigorously” in court. At the time of writing, a specific court date has yet to be established.

The suit against Disney and Chapek comes after a particularly rough few months for the ex-CEO. After several complaints that his leadership had led the company astray during the pandemic, he was forced to resign from his high-ranking position and was replaced by Bob Iger, who returned as CEO after having held the job between 2005 and 2021. Chapek was also widely unpopular amongst the public due to a myriad of missteps including hiking the prices of Disney’s various services and his lackluster response to Florida’s controversial “Don’t Say Gay” bill. Iger’s return came as a shock to Hollywood but he noted that he won’t hold the position for long as he’s actively looking for a replacement to take over in the near future.

Source: The Hollywood Reporter


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