Disney's Stock Pops After Company Doubles Down On Streaming

Walt Disney Co DIS announced a business reorganization after Monday’s market close that points to a renewed focus on the direct to consumer streaming model.

What Happened: Disney announced three new content groups called Studios, General Entertainment and Sports.

The reorganization calls for the creation of the new Media and Entertainment Distribution Group. The Media and Entertainment Distribution Group will be responsible for all streaming services. The group will oversee content distribution and monetization of the streaming services.

Kareem Daniel, a 14-year Disney veteran, was named the Chairman of the Media and Entertainment Distribution Group.

The Streaming Services segment will be led by Rebecca Campbell and will be included in the Media and Entertainment Distribution Group.

The Parks, Experiences and Products division will remain a separate unit.

Related Link: How Disney+ Can Surpass Netflix, According To Dan Loeb

Why It’s Important: The reorganization shows a continued focus from Disney on its streaming platforms like Hulu, ESPN+ and Disney+. As of early August, Disney+ had more than 60 million subscribers.

“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our company to more effectively support our growth strategy and increase shareholder value,” Chapek said.

Daniel has been responsible for segments like games and interactive, consumer products, publishing and studio distribution. He was also part of the Imagineering unit that saw evergreen properties like Star Wars: Galaxy’s Edge and Toy Story Land added to theme parks.

The move will allow the content teams to separate from distribution, which the company believes will help going forward.

“Our creative teams will concentrate on what they do best – making world-class, franchise-based content,” Chapek said.

The move comes as activist investor Dan Loeb is pushing for Disney to cut its dividend to fund spending for streaming content to get ahead of rival Netflix NFLX.

“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,” Chapek said.

What’s Next: Disney will host a virtual investor day on Dec. 10. The reorganization is effective immediately with the transition to financial reporting under the units set to take place in the first quarter of 2021.

Shares of Disney are up 4% to $130.49 in after-hours trading.