Disney CEO Accused of Fraud Scheme, Faces Massive Lawsuit

in Disney, Entertainment

Walt Disney Company CEO Bob Iger in front of Cinderella Castle

Credit: Inside the Magic

The Walt Disney Company, including its former and current CEOS, is facing a lawsuit alleging fraudulent actions.

The Walt Disney Company is one of the biggest corporations in the world. The company, which was started by Walt Disney himself, has grown to include numerous facets of media and tourism. Disney operates resorts across the world, highlighted by Walt Disney World Resort in Orlando and Disneyland Resort in Anaheim, and those theme parks bring in billions of dollars in revenue each and every year.

Exterior of The Walt Disney Company
Credit: Disney

As you already know, Disney doesn’t stop there. Disney is home to many production studios– including Walt Disney Animation, Disney Pixar, Lucasfilm, Marvel Studios, and 20th Century Studios-– which make numerous full-length films and short series. One of Disney’s most controversial projects has been the Disney+ streaming platform.

In addition to its extensive library, Disney+ has invested heavily in creating original content exclusive to the platform. This includes new series set in established universes like The Mandalorian, as well as original films and documentaries. While Disney+ has enjoyed some success, it’s not without its challenges. The streaming market is highly competitive, with established players like Netflix, Amazon Prime Video, and new entrants like Max and Peacock vying for viewers’ attention. Additionally, as the streaming landscape evolves, maintaining a steady flow of high-quality original content becomes crucial.

Disney+_feature image
Credit: Disney

Disney has made decisions to change prices, introduce ad tiers in the future, and still, the company has seen a decline in subscribers, with reports indicating they lost more than 4 million subscribers back in a May update.

Deadline now reports that The Walt Disney Company, including former CEO Bob Chapek and current CEO Bob Iger, is being accused of committing fraudulent actions in its handling of Disney+.

“Plaintiff brings this action derivatively for the benefit of Nominal Defendant Disney against certain of the Company’s current executive officers and directors aiming to rectify the Defendants’ violations of the Exchange Act and breaches of fiduciary duties for issuing false and misleading statements and/or omitting material information in the Company’s public filings and proxy statements from approximately December 10, 2020 to the present.”

The allegations go on to say that the company, including its executive officers, allegedly “hid the extent” of losses on Disney+.

“To conceal these adverse facts, defendants engaged in a fraudulent scheme designed to hide the extent of Disney+ losses and to make the growth trajectory of Disney+ subscribers appear sustainable and 2024 Disney+ targets appear achievable when they were not,” shareholders claim.

Former CEO Bob
Credit: Disney

The Disney lawsuit alleges that the company, including former CEO Bob Chapek, intentionally aired certain Disney+ original shows on other networks as a way to make them seem more successful than they were.

“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.”

Former Disney CEO Bob Chapek and Current Disney CEO Bob Iger in front of a blue background saying The Walt Disney Company
Credit: Disney

Disney has not issued a statement on these complaints as of yet.

Inside the Magic will keep you updated on the latest with these filings and much more pertaining to The Walt Disney Company.

in Disney, Entertainment

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