BREAKING: Disney Named in Lawsuit, Accused of Misleading Investors About Disney+ Revenue
Disney is facing yet another legal challenge.
According to Bloomberg Law, Disney and former CEO Bob Chapek along with other executives have been named as defendants in a new class action lawsuit filed by a pension fund on May 12th in the US District Court for the Central District of California.
What Investors Are Alleging
According to the proposed class action suit, an investor alleges that Disney’s October 2020 reorganization, which involved the firing of CEO Bob Chapek and eventual replacement with former CEO Bob Iger, “facilitated a scheme to hide steep costs associated with its Disney+ streaming service.”
The complaint states that Disney “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 the 2024 fiscal year.
The removal of Chapek also “represented a dramatic departure from Disney’s historical reporting structure,” according to the complaint, and allegedly “redirected power and control from creative content executives to Chapek’s lieutenant Kareem Daniel.”
The complaint estimates that this suit could potentially affect hundreds or thousands of members.
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