Can Bob Chapek Hit 240?

Welcome back to In The Room, my biweekly private email revealing the inner workings of the media industry.
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Happy Wednesday, I’m Dylan Byers.

Welcome back to In The Room, my biweekly private email revealing the inner workings of the media industry. Despite my prediction last month that the industry was entering the dog days of summer—a post-Sun Valley, pre-Labor Day tropical depression in which dealmakers typically disappear onto Aegean yachts, say, or into fly-fishing country outside Jackson—the media business has been practically supercharged with activity. Brian Stelter was fired from CNN, an activist investor took an interest in the Times, and David Zaslav pulled out the hatchet at WBD. Disney surpassed Netflix in total subscriptions (or did it?) and animators are up in arms about all their shows disappearing from HBO Max.

Anyway, I’m on vacation this week, and will be fully off the grid on Friday. In the meantime, I wanted to share some fascinating insights from my partner Bill Cohan on hedge fund manager Dan Loeb’s nearly billion-dollar stake in Disney. Bill is a former Wall Street M&A banker, himself, and has known Loeb for years. So there is really nobody better positioned in this topsy turvy media landscape to explain what the billionaire activist investor really wants from Bob Chapek ($240 a share) and what he might do to get it.

As always, you can reach me by responding directly to this email. Just don’t be upset if I ignore you until next week.

Back next Wednesday,

Dylan

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Dan Loeb’s Chapek Punch List

When you cut through it, all Dan Loeb really really wants Bob Chapek to do is slash Disney’s bloated costs and pay down the company’s $50 billion of debt. And maybe shake up the board. And maybe spin ESPN. And, oh wait…

WILLIAM D. COHAN

Unlike say Warren Buffett or Bill Ackman, investors who like to buy and hold until the pain becomes too acute, Dan Loeb has a reputation for being nimble, and opportunistic. He once told me that investing is simply all about figuring out when to do something that’s obvious, and when to do something that’s contrarian. At the outset of the pandemic, for instance, Loeb made what he deemed to be the obvious decision to invest in Disney, telling me it was a “tremendous company” with “a great brand” and he was very excited about being able to buy the stock at a discount that resulted from the negative impact that the quarantine had on the company’s parks, sports rights, cruise business, and theatrical releases. Loeb’s Third Point hedge fund owned stock in Disney worth more than $900 million at its peak, and then ultimately sold out of the position completely earlier this year. Meanwhile, shares in Disney rose around 70 percent between May 2020, about when he bought the first time, and August 2021, when he disclosed his first Disney stake. He made a killing.

More recently, on August 15th, Loeb disclosed that he had taken another bite of the Disney apple, amassing a roughly $750 million stake in the company. This time, however, his money came with a few requests, which he politely yet forcefully articulated in a letter to Disney C.E.O. Bob Chapek. I’ve known Dan for a long time and have written about his financial exploits for years. He lives large (but tastefully), as you would expect of a billionaire hedge fund manager. He’s got an apartment at 15 Central Park West, a home in the Hamptons, a private-jet and a megayacht. He’s a big surfer. (Third Point is named after a break in a favored surfing spot near his hometown of Los Angeles.) He’s got a world-class collection of contemporary art. He’s plenty open-minded, borderline liberal...

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