Disney investors argue Kimmel's suspension hurt profits, demand investigation
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A group of Disney investors is alleging that the company prioritized "improper political" considerations over the best interests of stockholders with its brief suspension of Jimmy Kimmel last week.
Why it matters: In an era where companies are caving to demands from the Trump administration, the investors are arguing that political expediency might in fact hurt profits.
Zoom in: In a Wednesday letter to CEO Bob Iger, lawyers representing the American Federation of Teachers, AFL-CIO and Reporters Without Borders said they are seeking answers about the suspension of "Jimmy Kimmel Live!"
- "Due to the Trump administration's continued threats to free speech, including with respect to ABC, we are writing to seek transparency into the initial decision to suspend Mr. Kimmel and his show," the lawyers wrote.
- The investors seek board minutes, internal communications, affiliate agreements and analyses of the suspension's financial impact.
- While the group applauded ABC for doing the "right thing" in bringing back the show, the letter noted the company still faces negative repercussions given President Trump's threat to "test ABC out on this."
The lawyers noted that "Disney's stock suffered significant declines in response to the Company's abrupt decision to suspend" the show.
- They argued the decision "appeared to be in response to threats" from FCC chairman Brendan Carr, as well as from ABC affiliates under Nexstar Media Group and Sinclair Broadcast Group.
- "There is a credible basis to suspect that the Board and executives may have breached their fiduciary duties of loyalty, care, and good faith by placing improper political or affiliate considerations above the best interests of the Company and its stockholders," the lawyers wrote.
- Disney shares fell roughly 3% during the six-day suspension, before the show was brought back Tuesday night.
Catch up quick: Carr seemed to threaten broadcast companies, warning of repercussions if they did not drop Kimmel following his on-air comments about conservatives' reaction to Charlie Kirk's killing.
- Nexstar and Sinclair, which together control about 25% of ABC's local affiliates, are still pre-empting the program across their ABC affiliates.
What they're saying: "The government cannot and should not threaten to punish someone simply because it does not like what they have to say," Roberta Kaplan, one of several lawyers representing the groups, said in a statement to Axios.
- "While large media companies have been at the front lines, they too should not succumb to unconstitutional threats or blackmail," said Kaplan, who previously sued President Trump on behalf of E. Jean Carroll.
Andrew Crook, the AFT's national press secretary, told Axios that "the Disney board has a legal responsibility to act in the best interests of its shareholders."
- "We are seeking answers to discover if that bond was broken to kowtow to the Trump administration."
Disney did not immediately respond to Axios' request for comment.
Editor's note: This story was updated to include comment from the AFT.
