MOVIE NEWS – Investors are suing Disney over an alleged fraud in which the company hid losses on its streaming platform Disney Plus.

Disney is being sued by some of its investors who claim the company lied about losses associated with their streaming service, Disney Plus. The service has been struggling recently, starting with losing four million subscribers in the first three months of 2023.

Deadline has now revealed that Disney is being sued by some of its investors for allegedly hiding Disney Plus losses from them.

The lawsuit claims that Disney is lying about being able to turn the platform profitable by the end of 2024. In particular, they allege that the company’s former CEO, Bob Chapek, broadcast Disney Plus originals such as The Mysterious Benedict Society on the Disney Channel. All in order to make the platform look more successful than it actually is. As stated in the lawsuit:

“As part of a scheme to make Disney+’s financial performance appear more successful than it was, defendants aired certain shows that were supposed to be Disney+ originals – such as the mystery show The Mysterious Benedict Society and the medical drama Doogie Kameāloha, M.D. – first on legacy television networks such as the Disney Channel. By doing so, a significant portion of the marketing and production costs of the shows were shifted away from Disney+ and on to the legacy platforms. Despite this cost-shifting scheme, defendants repeatedly represented during the Relevant Period that platform distribution decisions were made based on different reasons, such as customer preferences and what was best for the business commercially.”

What does the Disney investor lawsuit mean for Disney Plus?

Disney Plus went through several changes in 2023. Among other things, it implemented a $3 price increase and announced that it would implement password-sharing tightening in 2024. Recently, The Spiderwick Chronicles was cancelled by Disney Plus along with other completed or nearly completed series. They have decided not to air them. This decision follows a wave of content that was removed from the platform and Hulu due to cost-cutting measures, including original series such as the TV series Willow and The One and Only Ivan.

The new lawsuit against Disney appears to be directed against Chapek’s decision to push vast amounts of resources into streaming, causing unprecedented internal reorganizations in the process.

It also underlines that the platform will not be a profitable endeavour for Disney by 2024. Yet that was Chapek’s original plan. This could put the future of the streaming platform in jeopardy, depending on how the lawsuit plays out.

It’s unclear at this point how the Disney investor lawsuit will affect the company and its streaming efforts in the future. However, it does highlight that the platform is still not profitable for Disney. Despite expensive shows like Secret Invasion and Ahsoka being made exclusively for the platform. It is possible that this new lawsuit from Disney Plus could have implications for the future of the streaming service.

Source: Deadline