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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Netflix, Inc.    NFLX

NETFLIX, INC.

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Netflix : Activist investor Dan Loeb urges Disney to end dividend to fund streaming content

10/07/2020 | 01:48pm EST

Oct 7 (Reuters) - Activist investor Daniel Loeb on Wednesday urged Walt Disney Co to forgo paying a dividend and use the cash to make and buy more programming for its Disney+ streaming service as it battles tech giants Netflix and Amazon.

Loeb, whose hedge fund Third Point bought into Disney during the second quarter, said the company could double the programming budget for Disney+ by reallocating a dividend of a few dollars per share.

"We believe the company should permanently suspend its $3 billion annual dividend, redirect capital entirely into content production and acquisition for Disney’s (direct-to-consumer) business, centered around Disney+," Loeb wrote in a letter to Disney Chief Executive Robert Chapek on Wednesday. Reuters obtained a copy of the letter.

In May, Disney's board of directors said it would suspend payment of its semi-annual cash dividend for the first half of fiscal 2020.

A Disney spokesman did not immediately respond to a request for comment. The company said in August that it would hold an investor day in the coming months to provide an update on its streaming strategy.

Disney shares rose 1.9% to $123.19 in afternoon trading on Wednesday.

Loeb added Disney to Third Point's portfolio some months ago when its shares were beaten down by worries over how theme parks and movie theaters would survive the global coronavirus pandemic.

Disney said in August it had attracted more than 100 million streaming customers worldwide in just the first nine months of its digital video push. Netflix boasts 193 million, but it got a head start in the streaming market 13 years ago.

While Loeb wrote that he did not want to intrude on Disney’s basic business decisions, he left little doubt that he wanted the company to move more quickly to capture streaming subscribers.

Even though a more aggressive investment strategy may weigh on short-term earnings, Loeb argued that with time, investors would see a benefit.

"Time is of the essence and the company should consider significant additional investments in content, both through production and acquisitions here and abroad," he wrote.

The letter, first reported by Bloomberg, struck a conciliatory tone with Loeb saying he looked forward to a "constructive dialogue" with the company.

He also urged Disney to embrace home entertainment as the future, rather than movie theaters.

"Every Hollywood executive has been able to enjoy first-run movies in the comfort of their home for years," Loeb wrote. "We urge you to democratize this experience and to continue to embrace the future of home entertainment with the utmost urgency in executing the company’s digital transformation." (Reporting by Subrat Patnaik in Bengaluru, Svea Herbst-Bayliss in Boston and Lisa Richwine in Los Angeles; Editing by Maju Samuel, Bernadette Baum and Chizu Nomiyama)


© Reuters 2020
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Financials (USD)
Sales 2020 24 937 M - -
Net income 2020 2 856 M - -
Net Debt 2020 8 551 M - -
P/E ratio 2020 79,6x
Yield 2020 -
Capitalization 220 B 220 B -
EV / Sales 2020 9,17x
EV / Sales 2021 7,78x
Nbr of Employees 8 600
Free-Float 98,4%
Chart NETFLIX, INC.
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Netflix, Inc. Technical Analysis Chart | NFLX | US64110L1061 | MarketScreener
Technical analysis trends NETFLIX, INC.
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 43
Average target price 546,33 $
Last Close Price 498,31 $
Spread / Highest target 40,5%
Spread / Average Target 9,64%
Spread / Lowest Target -59,9%
EPS Revisions
Managers
NameTitle
Wilmot Reed Hastings Chairman, President & Co-Chief Executive Officer
Theodore A. Sarandos Co-CEO, Director & Chief Content Officer
Gregory K. Peters Chief Operating & Product Officer
Spencer Adam Neumann Chief Financial Officer
Adriane C. McFetridge Engineering Director
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