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In what may be the fastest successful activist campaign ever, just 3 work days after Dan Loeb lobbed a letter at Disney, urging the company to DITCH its $3 billion annual dividend and instead to spend the money to expand its streaming services, the company announced after the close on Monday “a strategic reorganization of its media and entertainment businesses” although it did not concede that it was doing so under pressure from the Third Point billionaire but “in light of the tremendous success achieved to date in the Company’s direct-to-consumer business and to further accelerate its DTC strategy.”

Disney said that under the new structure, it would focus on developing and producing original content for the Company’s streaming services, as well as for legacy platforms, while distribution and commercialization activities will be centralized into a single, global Media and Entertainment Distribution organization; furthermore, a new star, Kareem Daniel, who previously headed up consumer products within the theme-park division, will now take over distribution for the Disney+, ESPN+ and Hulu streaming services.

The new Media and Entertainment Distribution group will be responsible for all monetization of content—both distribution and ad sales—and will oversee operations of the Company’s streaming services. It will also have sole P&L accountability for Disney’s media and entertainment businesses.”

The creation of content will be managed in three distinct groups—Studios, General Entertainment, and Sports—headed by current leaders Alan F. Horn and Alan Bergman, Peter Rice, and James Pitaro.

The newly launched Media and Entertainment Distribution group kills two birds with one stone: not only does it seemingly placate Loeb and other activist shareholders, but it also gets points for corporate responsibility, promoting a minority executive as the new group will be headed by Kareem Daniel, formerly President, Consumer Products, Games and Publishing.

All five leaders will report directly to CEO Bob Chapek.  Disney Parks, Experiences and Products will continue to operate under its existing structure, led by Josh D’Amaro, Chairman, Disney Parks, Experiences and Products, who continues to report to Mr. Chapek. Rebecca Campbell will serve as Chairman, International Operations and Direct-to-Consumer. Bob Iger, in his role as Executive Chairman, will continue to direct the Company’s creative endeavors.

Under the new structure, the Company’s three content groups will be responsible and accountable for producing and delivering content for theatrical, linear and streaming, with the primary focus being the Company’s streaming services:

• STUDIOS: Messrs. Horn and Bergman will serve as Chairmen, Studios Content, which will focus on creating branded theatrical and episodic content based on the Company’s powerhouse franchises for theatrical exhibition, Disney+ and the Company’s other streaming services. The group will include the content engines of The Walt Disney Studios, including Disney live action and Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, Lucasfilm, 20th Century Studios and Searchlight Pictures.
• GENERAL ENTERTAINMENT: Mr. Rice will serve as Chairman, General Entertainment Content, which will focus on creating general entertainment episodic and original long-form content for the Company’s streaming platforms and its cable and broadcast networks. The group will include the content engines of 20th Television, ABC Signature and Touchstone Television; ABC News; Disney Channels; Freeform; FX; and National Geographic.
• SPORTS: Mr. Pitaro will serve as Chairman, ESPN and Sports Content, which will focus on ESPN’s live sports programming, as well as sports news and original and non-scripted sports-related content, for the cable channels, ESPN+, and ABC.
• The Media and Entertainment Distribution group, led by Mr. Daniel, will be responsible for the P&L management and all distribution, operations, sales, advertising, data and technology functions worldwide for all of the Company’s content engines, and it will also manage operations of the Company’s streaming services and domestic television networks. The group will work in close collaboration with the content creation teams on programming and marketing.

A 14-year Disney veteran, Mr. Daniel has held leadership positions across a variety of businesses, including consumer products, games and interactive experiences, publishing, studio distribution, and Walt Disney Imagineering. He has a deep understanding of the Company’s brands and franchises and vast experience extending original IP into experiential storytelling across business segments. Prior to leading Consumer Products, Games and Publishing, Mr. Daniel served as President of Walt Disney Imagineering Operations, Product Creation, Publishing and Games, where he was responsible for helping to transform IP from the various content partners into evergreen franchise properties at Disney’s parks and resorts, including Star Wars: Galaxy’s Edge lands at Walt Disney World and Disneyland, Toy Story Land at Walt Disney World and Shanghai Disneyland, and Pixar Pier and the upcoming Avengers Campus at Disney California Adventure Park.

Mr. Daniel also served as Senior Vice President of Strategy and Business Development for Disney Consumer Products and Interactive Media, and prior to that, as Vice President of Distribution Strategy at Walt Disney Studios, where he worked closely with the leadership in developing the Company’s film content distribution strategy across multiple platforms and played a key role in the commercialization of the Studio’s films.

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Finally, more important than what Disney said, is what it did not say, namely that it would scrap the dividend – which arguably implies it is keeping the generous cash payment to shareholders – which also suggests that the Disney response to Loeb is merely optics and meant to generate a quick gain in the stock price without any true changes to Disney’s business model.

The stock seems to like the announcement for now, jumping about 4% after the close…

… although with little disclosure on just how much cash will to the new venture – and with the dividend in place, we expect it will be very little in a time when covid has still crippled the company’s theme parks and movie production – we expect the entire move to be faded shortly.