Disney’s CFO is OUT Amid Serious Allegations of Corporate Fraud

Posted on by Mathew Corn Uncategorized

An investigation is underway into claims by investors who say Disney execs engaged in unlawful business practices, including securities fraud, with regard to the success of Disney+.

A class-action lawsuit is mounting against The Walt Disney Company as shareholders have lodged complaints against the company about alleged dishonest business practices. The current investigation concerns whether three of Disney’s officers and/or directors engaged in those practices.

The Pomerantz Law Firm press release details the events that took place in late 2022 that have led to shareholders’ claims of wrongdoing on Disney’s part:

On September 21, 2021, Disney gave a virtual presentation at the Goldman Sachs Communacopia Conference. During the presentation, Chief Executive Officer Robert Chapek acknowledged that Disney+ subscriber growth had slowed in the fourth quarter of the fiscal year that ended on October 2, 2021. 

Disney CEO Bob Chapek talks park pass reservation system

On this news, Disney’s stock price fell $7.44 per share, or more than 4%, to close at $178.61 per share on September 20, 2021. 

On November 10, 2021, Disney reported its financial results for its fourth quarter and fiscal year ended October 2, 2021. Disney posted quarterly results that missed Wall Street’s already diminished expectations as the Company saw a dramatic slowdown in Disney+ subscribers. The Company added just 2.1 million customers during the quarter (the smallest quarterly gain since the service’s launch two years prior), revenue of $18.53 billion, and adjusted earnings per share of 37 cents – all of which were below consensus estimates of 119.6 million subscribers, $18.78 billion in revenues, and adjusted earnings per share of 49 cents.

On this news, Disney’s stock price fell $12.34 per share, or more than 7%, to close at $162.11 per share on November 11, 2021. 

Finally, on November 8, 2022, Disney issued a press release reporting the Company’s financial results for its fourth quarter and fiscal year ended October 1, 2022. Disney missed analyst estimates by wide margins on both the top and bottom lines. Revenue in the quarter grew just 9% to $20.15 billion, below estimates at $21.36 billion. Sales, at $20.2 billion, fell about $1 billion short of analysts’ projections. Earnings, excluding certain items, fell to 30 cents per share, missing the average estimate of 51 cents from analysts surveyed by Bloomberg. The Company’s DTC segment, which includes streaming services Disney+, ESPN+, Hulu, and Hotstar, reported a monumental operating loss of $1.47 billion compared to a $630 million loss in the same quarter the year prior. Revenue in the segment increased just 8% to $4.9 billion. The Company also reported a decline in its average revenue per Disney+ subscriber as more customers subscribed through a discounted bundle with the Company’s other services. Notably, the bundled offering made up about 40% of domestic subscribers, confirming that Disney was relying on short-term promotional efforts to boost subscriber growth while impairing the platform’s long-term profitability. 

On this news, Disney’s stock price fell $13.15 per share, or more than 13%, to close at $86.75 per share on November 9, 2022.

Disney’s then-CEO Bob Chapek was removed from his post back on Sunday, November 20–a move that sent shockwaves throughout the Disney community. Veteran CEO Bob Iger was reinstalled, returning to The Walt Disney Company under a two-year contract. On Thursday, Disney announced the stepping down of CFO Christine McCarthy, who will reportedly take a family medical leave beginning July 1, 2023. Her final day of leave, as well as her final day of employment with The Walt Disney Company, will be June 30, 2024. An interim CFO will take her place while the company searches for the next chief financial officer. No other details were shared.

Both Chapek and McCarthy have been named in the suit, as has Kareem Daniel, who was fired from The Walt Disney Company shortly after Chapek’s removal. The three are named for their alleged involvement in “drafting, producing, reviewing and/or disseminating false and misleading statements” regarding the success of the company’s streaming business, according to the 39-page document filed in the U.S. District Court for the Central District of California on May 12.

It remains to be seen whether McCarthy’s leave of absence is related to the suit.

Disney Shuts Down Multiple Movies Amid Hollywood Strike

Posted on by Mathew Corn Uncategorized

Some of the most highly-anticipated new Disney movies have been shut down.

The Walt Disney Company is known for being a media giant and producing some of the most beloved films and television shows of all-time. Disney is home to several different studios and branches of entertainment, including Disney Pixar, Walt Disney Animation, Marvel Studios, Lucasfilm, ABC, ESPN, 20th Century Studios, and much more.

Mickey Mouse

Though the brand has developed a cult-like following from many, that hasn’t stopped Disney from being in the midst of several controversies. The last two animated Disney movies to be released, Pixar’s Lightyear and Disney’s Strange World, were both met with several controversies, leading to them becoming massive box office bombs. Disney has been forced to lay off thousands of employees and executives due to budgeting problems, including the Director of Pixar’s Lightyear film, Angus MacLane.

Now, Disney is in the midst of another controversy, but this time it’s not with fans. It’s with writers.

The Writers Guild of America (WGA) — representing 11,500 writers — and the Alliance of Motion Picture and Television Producers has been on strike since May 2, 2023. Writers have demanded better pay from their studios, and this has led to several shows and major movies being put on hold, shut down, or even canceled. Though the Directors Guild of America just recently reached a deal, the WGA is entering its sixth week of being on strike, and no deals have been reported as of yet.

Amid the strike, Disney has been forced to shut down several projects. Disney Dining recently covered that Spider-Man 4 had been shut down indefinitely. Tom Holland, the actor who plays Spider-Man / Peter Parker, confirmed this in an interview, where he shared that the meetings had been paused.

“I can’t talk about that, but I can say that we have been having meetings,” he said. “We’ve put the meetings on pause in solidarity with the writers…There’s been multiple conversations had, but at this point, it’s very, very early stages.”

Now, it’s been confirmed that three more projects have been shut down due to the ongoing strike.

tom holland as peter parker/spider-man

Marvel Studios has shut down Mahersala Ali’s Blade, Thunderbolts, and the anticipated Disney+ series Wonder Man. Both Blade and Thunderbolts were anticipated films expected to be a part of the MCU’s Phase 5.

Thunderbolts was initially set to be released in July of 2024, but the strike could push the film to the later portion of the year or even into 2025, depending on how long the strike continues before the studios and writers come to an agreement.

Judge Puts a Wrench in DeSantis’ Plans Against Disney

Posted on by Mathew Corn Uncategorized

An important update has arrived regarding the ongoing legal battle between Governor Ron DeSantis and the Walt Disney Company.

If you follow Florida politics, it has been impossible to ignore the absolute mayhem that is the situation with the Reedy Creek Improvement District. It all started when Florida Governor Ron DeSantis proposed legislation that would affect the powers of special districts like the Reedy Creek Improvement District. The district was initially created by Walt Disney himself in the 1960s to give his company control over the development of the Walt Disney World Resort.

Disney is the largest taxpayer and explorer in the state of Florida, making it a sizeable threat to the Governor. Nevertheless, DeSantis has continued to fight back against Disney, thus drawing national attention to Orlando politics.

Ron DeSantis

While Disney fans and central Floridians have been aware of the squabble for a while, the situation became a national headline after it was announced that the Walt Disney Company would be seeing Ron DeSantis. The whole world has tuned in to see what will come of this high-profile lawsuit, which has elevated stakes due to the fact that DeSantis is a possible candidate for the Republican Party in the coming election.

Last week, DeSantis shocked the public when he filed a motion to disqualify the Judge assigned to the lawsuit. The Judge in question is Mark E. Walker, and DeSantis wants him removed because his “impartiality in this matter might reasonably be questioned.”

Just yesterday, a proposed briefing schedule and “forthcoming motions to dismiss” were revealed. Now, the judge has said that the court “will take no action.”

Bob Iger The Walt Disney Company CEO BuzzFeed Deal

This decision is because the Judge had determined that no further action could be made until it was figured out what would come from DeSantis’ wish to disqualify the judge. Judge Walker explained that “This court will take no action, scheduling or otherwise, in this case until it rules on the ending motion for disqualification.”

It will be fascinating to see what comes of this case once it is revealed if the Judge will be dismissed or now.

Gov. DeSantis Questions Impartiality in Disney Case, Files New Motion

Posted on by Mathew Corn Uncategorized

Via InsideTheMagic.net

As the legal battle between The Walt Disney Company and Ron DeSantis continues, the Florida Governor’s team has filed a new motion, questioning the impartiality of the Court in the case.

Florida has become the battlefield for one of the most discussed conflicts of the last years, with Ron DeSantis and The Walt Disney Company embroiled in a year-long battle over the Reedy Creek Improvement District that has forced Disney to take drastic actions across the company, including canceling million-dollar projects in Florida, and caused fear among fans, questioning if visiting Walt Disney World Resort is safe given the latest developments.

And as the conflict continues and lawsuits fly back and forth among both parties, it seems like the Florida Governor’s legal team fears that The Walt Disney Company may get the upper hand, as they have filed a new motion to disqualify Chief Judge Mark E. Walker in the case against Disney, arguing that “the Court’s impartiality in this matter might reasonably be questioned.”

Journalist Scott Gustin (@ScottGustin), who tweets about theme parks, entertainment, “and some politics,” shared the motion through his Twitter account.

DeSantis’ legal team argues that the Court — Chief Judge Mark E. Walker — has previously made remarks implying that DeSantis is trying to retaliate against Disney “based on Disney’s viewpoints” and could “reasonably imply that the Court has prejudged the retaliation question here.”

The motion cites two unrelated cases in which Disney has been brought up, including comments regarding “[Taking] away Disney’s special status because they’re woke,” and suggests that “the Court should recuse itself and order that the case be reassigned to another judge.” You can read the filing here.

Florida Governor Ron DeSantis giving a conference in front of the United States flag

Disney Terminating Thousands of Employees Effective Immediately

Posted on by Mathew Corn Uncategorized

After several rounds of layoffs, The Walt Disney Company will once again be firing hundreds of its employees.

We first learned of Disney’s mass-layoff plan back at The Walt Disney Company’s Q1 earnings call. Disney CEO Bob Iger dropped the bombshell, declaring that around 7,000 jobs would be cut as a part of this company-wide restructuring. During the call, The Walt Disney Company shared its ginormous profits, posting an increase of 35% on the Parks side of things. This translated into $2.1 billion from Disney’s collection of Parks alone.

These layoffs have come in phases, with the third round of planned layoffs starting today, May 22, 2023. This third round is expected to affect roughly 2,500 positions via Deadline. 

The layoffs were not expected to hit the theme park division hard, though they have been affected. The target of this third round is not specified.

Disney Parks, Experiences, and Products Chairman Josh D’Amaro stated that he did not expect the layoffs to affect hourly workers on the front lines at Walt Disney World. Things have been shaky for Disney ever since the start of the COVID-19 pandemic.

From its stock price dropping to losing subscribers on its streaming platform, Disney has been in some hot water over the last few years.

One of Disney’s biggest controversies and, ultimately, one of its biggest failures can be found in the now-defunct Galactic Starcruiser. Earlier this month, Disney revealed that it would be permanently closing this immersive Star Wars-themed hotel experience.

Guests look out the window on Galactic Starcruiser.

The ambitious location will be closing for good in September of 2023, meaning it will have only been operating for about a year and a half. As for what Disney will do with the unused space, only time will tell. But it’s safe to say Disney lost a significant chunk of change on this admirable experiment.