Yahoo Finance’s Allie Canal joins the Live show to break down investor Dan Loeb's stake in Disney and the changes he's looking to make with ESPN.

Video Transcript

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BRIAN CHEUNG: Shares of Disney on the move this Monday morning, after Dan Loeb's Third Point repurchased a significant stake in the company. You can see shares up about 3% so far, Loeb pushing the media giant to spin-off ESPN, saying the sports network would have greater flexibility to pursue other business initiatives separate from Disney.

Let's bring in Yahoo Finance's Alexandra Canal, who's got the details. What is Dan pushing for here?

ALEXANDRA CANAL: Yeah, Brian. And what's interesting here too is that Dan Loeb previously held a stake in the company from 2020 to early 2022, selling that stake off in March. But the fact that he has now repurchased a, quote, "significant stake" in the company following that strong Q3 earnings report signals it's bullish on the direction. He did cite the strength of the streaming business. But now he wants to be an activist investor. And, as you mentioned, he's laid out some pretty significant changes to, quote, "unlock further value in the near-term," one of those suggestions being the spin-off of the ESPN network. He said the network would have greater flexibility to pursue business initiatives that they may be difficult to pursue being a part of Disney, such as sports betting.

Now, interesting thing here is that on their earnings call, CEO Bob Chapek said that the company is still pretty bullish on sports and that they were working hard to announce something on sports betting. But investors and analysts have long questioned the future of ESPN, the future of ESPN+. Where do things go from here? So I don't think this is a new idea, I think this has been internally debated at Disney, also something that The Street has been closely watching.

Another suggestion from Loeb-- being that buyout of Comcast. Comcast owns a 33% stake in Hulu and Loeb really pushing for Disney to buy them out sooner rather than later, ideally before that early 2024 contractual deadline. He even said, look, if you have to pay a premium to get out of this, that's important, and that needs to be done really, really soon.

Other changes include more cost cutting plans, refreshing the board members, continuing that suspension of its cash dividend payments. So we'll see what comes out of this. The stock is up around 3%. So it's a bit of a confidence boost, I think, heading into the second half of the year. But I think it is clear that Disney still has a lot of work to do, despite their strong earnings that we saw last week.

AKIKO FUJITA: Well, Allie, specifically on ESPN-- I mean, I realize what Dan Loeb is saying, but also, you know, we're talking about additional revenue channels that are needed, at least that's his argument, at a time when we have seen ESPN face a lot of competition. Sure, it's still the leader in sports, but we've talked a lot about other streaming services getting in on the sports space, whether that is Amazon or Apple too. I mean, how much of this plays into that too and really this idea that we've heard a lot of analysts talk about before, which is move-- migrating a lot more of these games onto streaming specifically.

ALEXANDRA CANAL: Yeah, I think that is a huge factor. We have seen Amazon, Apple really lean into sports, sports content, sports betting. And ESPN, it's struggled a little bit. They're potentially-- reportedly losing the rights to the Big Ten league, that is something that could go to one of the other Media Giants out there. So I think people are trying to figure out what's best for both businesses, right? What's best for Disney? What's best for ESPN? And if a spin-off is the answer, what are we waiting for?

And I think investors really want to see a clear strategy for Disney, clearly the legacy business. Advertising has slowed. That's not the future of the company, so what is? And I think this is a critical point for Bob Chapek. He just got that contract renewed. What are you going to do with ESPN? What are you going to do with all of your other properties?

So I think really what everyone wants is him to have a very clear direction on where things go from here. And ESPN is certainly a big part of that equation. So we'll have to wait and see what happens there.

BRIAN CHEUNG: A huge part of that. Yahoo Finance's Alexandra Canal, thanks so much for the breakdown there.