‘STAGGERING COSTS’

Disney Sued by Investors Again Over 'Fraudulent’ Streaming Costs

Investors allege they were purposefully deceived by statements from former chief executive Bob Chapek, who promised profitability by 2024.

Disney is once again facing another lawsuit accusing the media giant of misleading investors by engaging in “a fraudulent scheme designed to hide the extent of Disney+ losses,” according to a new complaint. The suit, filed on Aug. 23 in California federal court, claims Disney tried to conceal the “staggering costs” it suffered while attempting to boost its subscriber count and promise profitability by the end of 2024. Investors allege they were purposefully deceived by statements from former chief executive Bob Chapek—specifically one from December 2020, which bragged about how “Disney+ has exceeded our wildest expectations” and “bolstered our confidence” despite suspicious profitability forecasts. The suit also cites a “hugely controversial” reorganization of the company’s media and entertainment operations that allowed Chapek to exert “near complete control over the Company’s strategic decisions around content.” In 2022, Disney’s stock fell 44 percent, and recently, it hit a nine-year low with a price of about $84 per share. Disney did not respond to The Hollywood Reporter’s request for comment.