Activist investor Dan Loeb backs off from asking Disney to sell ESPN

(Reuters) - Billionaire activist investor Daniel Loeb backed off from pushing Walt Disney Co to spin off ESPN, saying he has a "better understanding" of the sports television network's potential for growth.

This comes after Disney Chief Executive Bob Chapek reaffirmed the value of ESPN to the media company.

"We believe that ESPN is an asset that is well placed within the Walt Disney Company (NYSE:DIS)," Chapek told Reuters.

The investor said in a tweet https://twitter.com/DanielSLoeb1/status/1568958464164069376?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1568958464164069376%7Ctwgr%5E90ee1840a55a8505371308e1e7166f82e0649fb5%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.bloomberg.com%2Fnews%2Farticles%2F2022-09-11%2Floeb-backs-down-on-call-for-espn-spinoff-after-disney-rejection on Sunday that he looks forward to seeing ESPN Chairman James Pitaro execute on the growth and innovation plans, "generating considerable synergies as part of" Disney.

Loeb, who runs Third Point, in August disclosed a stake of roughly $1 billion in Disney and announced plans to push the company to make a string of changes, from spinning off ESPN to buying back shares and adding board members.

Chapek confirmed reports that Disney had received numerous inquiries from companies seeking to buy ESPN earlier this year amid rumors that the company was weighing a sale of the cable network.

The company has spent the last year laying plans to reignite growth at ESPN, and to position it for the future as part of Disney's bundle of streaming service.

"It's been a great cash flow generator for us, which is, as we ramp up with streaming, kind of helps pay the bills," said Chapek. "It's very, very positive today, and the most important thing was to always look for the future, right?"

On Loeb's plan to push Disney to add new board members, Chapek defended the board, saying it had a broad "range of skillsets" and that the average tenure on it was four years.

Third Point, which owns roughly 0.4% stake in Disney, has also proposed that Disney accelerate the timetable for buying the remaining stake in streaming service Hulu from minority stakeholder Comcast Corp (NASDAQ:CMCSA) ahead of the planned 2024 acquisition.

Chapek told Reuters he has been in conversation with Comcast about accelerating the timetable for the acquisition. "I would think it would make sense to them because it's inevitable," he said.