Iger’s Newest LawsuitThe Dark Herald
Iger had to know this one was one coming
The inevitable shareholder lawsuit.
“Disney leadership faces a fresh lawsuit from shareholders accusing management of knowingly deceiving investors about the financial health of its core Disney+ streaming service, as frustrations hit a fever pitch with the stock wobbling near a nine-year low.
Beginning in December 2020, Disney’s top executives “repeatedly misled investors” about the extent of Disney+’s losses, according to the complaint filed Wednesday by New Jersey-based Stourbridge Investments, first reported on by the Hollywood Reporter
The suit names Diseny’s (sp) former and current CEOs Robert Chapek and Bob Iger, its former CFO Christine McCarthy and several other current and former executives as defendants.
The firm’s “wrongful acts and omissions” led to the “precipitous decline in the market value” of Disney shares, the lawsuit alleges
The company’s brass “materially misrepresented” Disney+’s financial future when it predicted three years ago it expected the service to turn a profit and have 230 to 260 million subscribers by 2024, the suit argues; Disney+ had 146 million subscribers as of the end of June, when Disney reported a $512 million loss in its total streaming unit.
The lawsuit also alleged Disney hid “the true costs of the platform” by shifting shows’ marketing and production costs from Disney+ to the company’s legacy TV networks, in some cases by debuting shows on linear TV channels even if they were meant to be streaming originals.
Disney did not immediately respond to Forbes’ request for comment, but the company told the Hollywood Reporter it planned to “defend [itself]vigorously” against a similar shareholder suit brought forward in May.”
“Oh, who would be king in this wicked world?”
Well, you wanted the job back Bob.
Something Forbes didn’t report was that this new suit alleges insider trading. Which I am absolutely not going to report on other that to say that is what is in the lawsuit.
The last paragraph mentions the earlier pension fund lawsuit. Which your Dark Herald predicted better than a year ago
“First of all, if you are a pension fund then you are looking for stocks that are low risk but are a good bet to go up in value, and you want them to pay dividends. The smart ones tend to be very conservative fiscally. They don’t take big risks. And they invest on the basis of due diligence research. These guys do go through all the documentation that the company provides.
Now granted these investment projections provided by the company in question are given to sunny optimism but there is a difference between that and fraud. If you cooked the books on the investor documentation, then you have committed fraud.
A pension fund is not some angry celebrity or SJW activist organization (generally). These organizations don’t sue over butt-hurt feelings. They sue over corporate malfeasance.
Here is the super important part: They are suing over the number of streamers that HBOmax claims it had when Discovery and Warner Brothers merged because originally the pension fund was invested in Discovery. Discovery was indeed a healthy company at the time the investment was made, it was marrying it to Warner Brothers that damaged the value.
Is Zaslav going to be hurt? Very doubtful from what I’ve been told. This was just a necessary first step in legally redirecting the investor’s ire to where it rightfully lay: AT&T.
Ma Bell was the owner of the company when the decision to cook the books on subscriber numbers was made. Zaslav wasn’t an employee of the company at the time
Darkings: Why is any of this the big deal you think it is?
Dark Herald: Because ALL of the studios have been cooking the books.
Every single studio with a streaming service has reported subscriber numbers that have no basis in reality. You have huge numbers of subscribers that have paid nothing for their subscriptions. You have vast numbers of subscribers that have never once viewed their service. You actually have an incredible amount subscribers who would be surprised as hell to find out they were subscribers in the first place. That I had both Apple TV+ and Paramount Plus was news to me.
Granted Warner Media was worse about this practice than the others because they already had things like HBO Now and HBO Go that were concurrently listed as HBOmax subs. There were a few other things like DC’s streaming service and CrunchyRoll that got rolled in as well.
Regardless, the important part is when this gets redirected to ATT and doesn’t get thrown out of court, that is when the floodgate of class action lawsuits is going to start. And not just against AT&T but against ALL of the major studios.
Yep, to include Disney.”
Here’s the big thing. A second shareholder lawsuit means the blood is in the water. That is how this always works. There is going to be a shark-pile of lawyers tearing away at Disney now.