The Walt Disney Company announced a broad structural reorganization of its media and entertainment businesses Monday, in a move to ramp up and streamline its direct-to-consumer strategy. That involves the creation of the new Media and Entertainment Distribution group, which will oversee all content monetization and streaming operations. Kareem Daniel, most recently president of consumer products, games and publishing at Disney, will lead the unit.

The move comes just under a year after the launch of Disney Plus, which has since surpassed the 60 million subscriber mark.

Under the new structure, the studios will continue to develop and produce originals for Disney’s streaming services — which include Disney Plus, Hulu and ESPN Plus — and legacy platforms. Distribution and commercialization will now be centralized under the Media and Entertainment Distribution group.

“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our Company to more effectively support our growth strategy and increase shareholder value,” said CEO Bob Chapek in a statement. “Managing content creation distinct from distribution will allow us to be more effective and nimble in making the content consumers want most, delivered in the way they prefer to consume it. Our creative teams will concentrate on what they do best—making world-class, franchise-based content—while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms, including Disney+, Hulu, ESPN+ and the coming Star international streaming service.”

Three groups will be responsible for producing content for film, linear TV and streaming services: studios, general entertainment and sports, under the purview of Alan F. Horn and Alan Bergman, Peter Rice, and James Pitaro. The reorganization is effective immediately, and Disney’s financial reporting will switch to the new structure in Q1 of fiscal

Netflix Originals next to popcorn stock photo 2

Streaming services have become a staple in many households, even before the pandemic kept people inside. It’s not hard to see why — a relatively small outlay per month gets you unfettered access to more games, music and TV shows than you could ever hope to buy or rent, let alone store on your devices. The monthly costs can easily make sense, particularly if your household voraciously devours content.

How much you’re willing to spend on streaming services is another story. Are you only willing to pay for one or two providers that you know you’ll use every day, or are you all-in? That is, of course, assuming you’re interested at all. If you’re the sort who prefers to hold on to permanent copies of everything, streaming could easily be a non-starter.

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There are cases to be made for and against heavy spending. Many of the best shows are on providers like Amazon Prime Video, Disney Plus, or Netflix. The costs of subscribing to multiple streaming video services could easily be justifiable if you want to watch it all. And if you’re a gamer, a service like Xbox Game Pass Ultimate, PlayStation Now, or Switch Online can give you an instant library. Music services like Spotify and Apple Music can also be easy to justify if you’re constantly searching for hot new albums.

At the same time, there’s little doubt that subscription service fatigue is a very real thing. A $10 fee here or there isn’t much, but it can quickly add up if you’re a completist. If you ditched cable over costs, there’s not much point to paying just as much (or more) for the streaming services that replaced it. And yes, subscription services by their nature leave you with no permanent copies. If you prefer to

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Alexander Kirch/Dreamstime

Walt

Disney

announced on Monday that it’s restructuring its media and entertainment segments to place a greater emphasis on its growing streaming business. The company is in the midst of a transformation from a television and movie theater-driven distribution model to a direct-to-consumer business that would rival

Netflix.

Disney stock (ticker: DIS) was up 5.5% in after-hours trading on Monday.

Disney is creating a new unit that will be focused on commercialization and distribution of its movies, TV shows, and sports content: the Media and Entertainment Distribution group. Meanwhile the company’s studios will continue to churn out content, without a bias toward any one form of distribution.

Essentially, rather than making TV content, movie theater content, and streaming service content, Disney’s creators will just make shows and films, with a separate team deciding how to monetize them. The new distribution group will be led by Kareem Daniel, a 14-year Disney veteran who most recently served as head of games and publishing in the company’s consumer products business.

Disney will have three distinct content-production groups. First is studios, which includes Walt Disney Studios, Pixar, Marvel, and Lucasfilm, and will make movies and series for theaters and streaming. Second is general entertainment, composed of ABC, Disney Channels, FX, National Geographic, and others. Its focus will be on content for Disney’s streaming services like Disney+ and Hulu and its cable networks. Last will be sports, responsible for content for broadcast on ABC and ESPN and for streaming on ESPN+.

It will be up to Daniel and the distribution group to determine which path to consumers is best for each piece of content. That could mean skipping a theatrical debut for a film and bringing it directly to Disney+. Or it could mean an advertising and affiliate fee-supported run

Activist investor Dan Loeb is urging The Walt Disney Company’s CEO Bob Chapek to halt its $3 billion annual dividend payment and redirect the funds towards content production and acquisition for its streaming service, Disney+, according to a letter Wednesday obtained by FOX Business.

Ticker Security Last Change Change %
DIS WALT DISNEY COMPANY 122.89 +2.04 +1.69%

“By reallocating a dividend of a few dollars per share, Disney could more than double its Disney+ original content budget,” Loeb wrote. “These incremental dollars would, based on our analysis, generate returns that are multiples of the stock’s current dividend yield by driving high life-time-value  subscribers to your [direct-to-consumer] platform.”

Besides bringing in additional subscribers, Loeb said “increased velocity of dedicated content production will deliver several knock-on benefits spread across your existing base including elevated engagement, lower churn, and increased pricing power.”

Loeb, who doubles as CEO and chief investment officer of hedge fund, Third Point LLC wrote that driving more subscriber growth, while reducing “churn” and increasing pricing will “present the opportunity to create tens of billions of dollars in incremental value for Disney shareholders in short order, and hundreds of billions once the platform reaches a larger scale.”

Churn is the rate at which customers stop subscribing to video services.

Disney announced in its third quarter earnings report in August that the streaming service had surpassed 60 million subscribers. Meanwhile, Disney-owned Hulu has surpassed 35.5 million subscribers and ESPN+ has surpassed 8.5 million subscribers.

Ticker Security Last Change Change %
AMC AMC ENTERTAINMENT HOLDINGS INC 4.04 -0.02 -0.49%

The letter comes as the coronavirus has prompted the acceleration of cord-cutting from traditional cable and has forced media companies to adapt to a new release model while the pandemic continues

Activist investor Dan Loeb is urging The Walt Disney Company’s CEO Bob Chapek to halt its $3 billion annual dividend payment and redirect the funds towards content production and acquisition for its streaming service, Disney+, according to a letter Wednesday obtained by FOX Business.

Ticker Security Last Change Change %
DIS WALT DISNEY COMPANY 122.89 +2.04 +1.69%

“By reallocating a dividend of a few dollars per share, Disney could more than double its Disney+ original content budget,” Loeb wrote. “These incremental dollars would, based on our analysis, generate returns that are multiples of the stock’s current dividend yield by driving high life-time-value  subscribers to your [direct-to-consumer] platform.”

Besides bringing in additional subscribers, Loeb said “increased velocity of dedicated content production will deliver several knock-on benefits spread across your existing base including elevated engagement, lower churn, and increased pricing power.”

“Together, the ability to drive subscriber growth, reduce churn, and increase pricing present the opportunity to create tens of billions of dollars in incremental value for Disney shareholders in short order, and hundreds of billions once the platform reaches a larger scale,” he added.

Disney announced in its third quarter earnings report in August that the streaming service had surpassed 60 million subscribers. Meanwhile, Hulu has surpassed 35.5 million subscribers and ESPN+ has surpassed 8.5 million subscribers.

Ticker Security Last Change Change %
AMC AMC ENTERTAINMENT HOLDINGS INC 4.04 -0.02 -0.49%

The letter comes as the coronavirus has prompted the acceleration of cord-cutting from traditional cable and has forced media companies to adapt to a new release model while the pandemic continues to prompt the closure of theaters across the globe, including Cineworld’s Regal Cinemas. As for Cineworld’s competitors, AMC and Cinemark, both have expressed their commitment to remain