A major activist investor pushes Disney to spend on streaming instead of dividends.

The hedge fund billionaire Daniel S. Loeb is urging the Walt Disney Company to cut its dividend payments and redirect the money to buying content for its Disney+ streaming service. It’s an unusual break from the traditional activist investor playbook, reports today’s DealBook newsletter.

Activists traditionally buy stakes in companies and press them to increase shareholder payouts, cut costs or shed assets. But in a letter to Disney’s chief executive, Robert Chapek, Mr. Loeb urged the entertainment giant to commit more resources to Disney+. By permanently cutting its dividend — worth about $3 billion a year — the company could more than double its Disney+ content budget of about $1 billion a year, Mr. Loeb said.

Mr. Loeb, whose Third Point hedge fund owned about a 0.3 percent stake in Disney as of June 30, said that the company could raise the “lifetime value” of Disney+ subscribers to $500 apiece, from $100 today, by charging more for the service and reducing customer defections. He also recommends consolidating Disney’s other streaming services, including Hulu and ESPN+, into Disney+.

By taking these steps, Disney could build a streaming business that eventually generates more revenue than cable TV and box-office releases, “but only if the company leans into this opportunity and invests more aggressively,” Mr. Loeb wrote.

Disney would still face a formidable competitor in Netflix. Analysts at BMO Capital expect that company to spend over $17 billion on new content this year, and more than $26 billion by 2028. Mr. Loeb wrote that the market values Netflix customers at about $1,200 each.

He isn’t the only activist investor seeking to shake up a major media company: Nelson Peltz’s Trian has taken a stake in Comcast, which owns NBCUniversal. But Trian has yet to publicly disclose what it wants Comcast to do.

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