Investors Sue Bob Chapek For LYING About Disney+

In November 2019, Disney launched its very own streaming platform — Disney+. Disney lovers now had a place where they could watch their favorite Disney films and television shows. There is also a ton of great Pixar, Marvel, and Star Wars content. Not only that, but Disney has been constantly creating new, original content for the platform. This includes hit shows like The Mandalorian, WandaVision, Muppets Haunted Mansion, and Hocus Pocus 2. Disney+ took off very quickly, especially since many people were forced to stay home when the COVID-19 pandemic hit just a few months later.

From the outset, Disney’s now-fired CEO Bob Chapek and CFO Christine McCarthy repeatedly said that the streaming service would not be profitable until 2024. However, it appears that may not be the case.

On May 12, a lawsuit was filed against Chapek, McCarthy, and Chapek’s right-hand man, Kareem Daniel. The lawsuit — which was filed in the US District Court for the Central District of California — claims that the three defendants lied about the revenue created by Disney+ and when the platform would reach a profit. The lawsuit was filed by an investor who wants the lawsuit to reach class-action status.

Per Bloomberg:

They [Chapek, McCarthy, and Daniel] “repeatedly misled investors about the success of the Disney+ platform by concealing the true costs of the platform, concealing the expense and difficulty of maintaining robust Disney+ subscriber growth, and claiming that the platform was on track to achieve profitability” by the end of fiscal year 2024, the complaint says.

The executives allegedly “debuted content created for Disney+ initially on a legacy platform in order to shift marketing and production costs onto that platform,” according to the plaintiff, the Local 272 Labor-Management Pension Fund.

When Chapek became CEO in February 2020, he immediately began restructuring the company. One of the hallmarks of Chapek’s restructuring was the centralization of power to those who were closest to him. One of those people was Kareem Daniel. Chapek’s restructuring was where the trouble really began, or so the lawsuit states.

Chapek’s reorganization “represented a dramatic departure from Disney’s historical reporting structure” and caused controversy within the company because it redirected power and control from creative content executives to Chapek’s lieutenant Kareem Daniel, the pension fund alleges.

In November 2022, Chapek was fired as CEO of Disney, and former Disney CEO Bob Iger returned to take his place. Since Iger’s return, more information has come out about subscriber growth (or lack thereof) in Disney+, as well as more honest financial results. Last quarter alone, Disney+ lost a massive 4 million subscribers.

While both Chapek and Daniel were let go from Disney, McCarthy is still serving as CFO. In fact, McCarthy — a longtime Iger ally — was reportedly the driving force behind Chapek’s termination. Insiders claimed that Chapek had been planning on blaming McCarthy for the trouble Disney was going through. However, McCarthy got to Chapek first.

Neither Disney, Chapek, nor Daniel has commented on the lawsuit.