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With Aim At Boosting Streaming, Disney To Restructure Its Entertainment Business

With Aim At Boosting Streaming, Disney To Restructure Its Entertainment Business
With consumers are increasingly shifting to digital viewing, and with the aim of accelerating the growth of its Disney+ and other streaming services, Walt Disney Co has restructured its media and entertainment businesses, the company said. 
The primary aim of the reorganization drive in the company is to separate the programming and content development and production work from the distribution work so that the company is able to be more responsive to demands from consumers. 
This announcement was made days after a call to the company by activist investor Daniel Loeb of hedge fund Third Point urged Disney was made to not pay dividends and instead spent that amount in the streaming business of the company.
The Disney+ streaming service was launched in November 2019 by the media and theme parks company. This new venture has a very successful and with more than 100 million streaming customers globally to Disney+, Hulu and ESPN+, the streaming business of the company has exceeded its own targets.
The pioneer in the streaming business Netflix has a total subscribed customer base of 193 million, but that based took the company 13 years to build.
Disney should stop paying dividends for now and instead use the money to create new TV shows and movies so that it is able to gain more new customers more quickly, argued Loeb.
While saying that the company is planning to increase investments in content, Disney Chief Executive Bob Chapek, in a television interview, refrained from confirming whether the company would be willing to cut its divided and instead source the money to investing in content.
"Managing content creation distinct from distribution will allow us to be more effective and nimble in making the content consumers want most, delivered in the way they prefer to consume it," Chapek, who took the company's top job in February, said in a separate statement to the media.
Disney's revamp of its media and entertainment structure was welcomed by Leob in a statement.
"We are pleased to see that Disney is focused on the same opportunity that makes us such enthusiastic shareholders: investing heavily in the (direct-to-consumer) business, positioning Disney to thrive in the next era of entertainment," Loeb said.
The new restructuring strategy of the company entails creating one single division for its studios, general entertainment and sports business and another global division or unit will include the company’s distribution and commercialization units.
While programming for streaming and traditional platforms would be developed by Disney’s creative teams, where the content would be offered to customers would be decided by the distribution group under the new arrangement, the company said. 
While accepting that as a result of "centralization" of functions, there would be layoff, Chapek, in the interview, did not say how many.
Disney said that its new media and entertainment distribution group would be headed by Kareem Daniel, formerly president of consumer products, games and publishing.
Disney's studio operations would be continued to be managed by Alan Horn and Alan Bergman which will include management of programming from big franchises including Marvel, Star Wars, Disney animation and Pixar.
The general entertainment programming will be headed by Peter Rice while sports units will be run by Jimmy Pitaro.

Christopher J. Mitchell

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