More Disney stockholders sue over Disney+
August 31, 2023
As Disney shares sink to levels not seen in a decad, the company has been hit with the latest lawsuit alleging it misled investors about the success, and the cost, of Disney+.
Disney is being accused of obfuscating the extent of its losses, pushing lofty subscriber growth targets and claiming that the streaming service was on track to achieve profitability by the end of 2024. Investors say they are targeting an alleged scheme to shift costs around the company by debuting content created for Disney+ on legacy platforms, thereby under reporting the true cost of the SVoD service.
The complaint filed in California federal court is at least the third taking issue with the company’s efforts to boost subscriptions for its streaming platform. Another suit claims that company executives hid the expense and difficulty of maintaining subscriber growth as it suffered “staggering costs” to create content, reports The Hollywood Reporter.
Acknowledging that subscriber growth had slowed in 2021, Disney reported last year that it missed analyst estimates by wide margins on revenue, sales and earnings. In Q4 2022, the company’s direct-to-consumer arm, which includes Disney+, ESPN+, Hulu and Hotstar, reported an operating loss of $1.47 billion (€1.35bn) — up from a $630 million loss in the same quarter the year prior. Disney’s stock dropped 13 per cent at the time.