LOS ANGELES (Legal Newsline) - A union pension fund is suing The Walt Disney Company, claiming investors were misled by executives' statements about the success of its Disney+ streaming platform.
Local 272 Labor-Management Pension Fund filed suit against Disney, Robert Chapek, Christine McCarthy and Kareem Daniel on May 12 in Los Angeles federal court, alleging violation of federal securities laws.
Robbins Geller represents the plaintiff, which says Chapek staked his legacy on he success of Disney+ during his two years as CEO. The suit says he and other defendants claimed the platform was on track to achieve profitability and up to 260 million paid global subscribers by the end of fiscal year 2024.
"Defendants made these representations notwithstanding the fact that initial subscriber numbers for Disney+ had been boosted temporarily and unsustainably by a low launch price of $6.99 per month, a bevy of additional short-term, low-cost promotions, and a near-captive audience of consumers who were homebound due to COVID-19 restrictions," the suit says.
Disney hid the staggering costs of competing in the streaming world, the suit says. In December 2020, the company's stock price reached an all-time high of more than $180 per share, the suit says, before it fell to $92.31 on May 11, 2023 as a result of financial troubles at the company.