Disney Faces Shareholder Lawsuit Alleging Misleading Statements About Disney+
Disney’s share has experienced a significant drop after US-based Stourbridge Investments issued a court case to the media giant, alleging false statements regarding Disney+’s performance. By: Theng Min Yee
Disney is currently under legal scrutiny as shareholders file a lawsuit claiming that the company provided misleading information to investors concerning the performance and financial standing of its Disney+ streaming platform. This lawsuit, brought by US-based Stourbridge Investments, asserts that Disney's leadership made material misrepresentations about Disney+'s financial health, ultimately resulting in a substantial decline in the company's market value.
The key of Stourbridge's claims is the accusation that Disney shifted certain marketing and production expenses from Disney+ to its longstanding legacy business. This alleged accounting practice would serve to obscure the true extent of the investment required for Disney's streaming endeavours. These allegations add to Disney's mounting legal challenges, as the company faced a similar shareholder-led lawsuit earlier this year.
Disney has encountered considerable financial setbacks over the past year, contributing to the downward trajectory of its stock price. However, CEO Bob Iger remains steadfast in his assertion that the streaming service is poised to turn a profit by the end of the 2024 financial year. Currently, Disney boasts a global subscriber base of 146.7 million across all its streaming services.
The lawsuit filed by Stourbridge Investments comes at a time when Disney is striving to navigate the competitive streaming landscape. Despite facing difficulties, the company remains committed to bolstering its streaming portfolio. With Disney+ at the forefront, the media giant seeks to secure a substantial share of the rapidly growing digital streaming market.
As the legal proceedings unfold, the outcome of the lawsuit could significantly impact Disney's reputation and financial standing in the eyes of investors and the media industry at large.
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