A coalition of prominent Disney investors, including labor unions and free speech advocates, has launched a formal demand for company records, claiming that the recent suspension of late-night host Jimmy Kimmel was a politically motivated capitulation that harmed shareholders and undermined First Amendment principles.
Investors Challenge Disney’s Fiduciary Duty
In a sharply worded letter dated Wednesday to Disney CEO Bob Iger, representatives from the American Federation of Teachers (AFT), AFL-CIO, and Reporters Without Borders accused the company’s board and executives of breaching fiduciary duties by prioritizing threats from federal regulators and broadcast affiliates over sound business judgment. The groups are seeking a trove of internal documents, including board minutes, executive communications, affiliate agreements, and financial impact analyses related to the suspension of “Jimmy Kimmel Live!”
The controversy erupted on September 15, when Kimmel delivered a monologue on his ABC late-night show critiquing the politicization of the assassination of conservative activist Charlie Kirk, a prominent Trump ally. The segment, which drew millions of viewers, sparked immediate backlash from right-wing commentators and threats of regulatory scrutiny from the Federal Communications Commission (FCC), as well as boycotts from major affiliates like Nexstar and Sinclair, which represent about 25% of U.S. households.
Stock Plunge and Affiliate Fallout
Disney responded by pulling Kimmel’s show from the air starting September 16, citing “operational adjustments” amid the uproar. The host returned to broadcasting on Tuesday, but the affiliates continued their standoff, airing reruns or alternative programming instead. The episode’s fallout contributed to a 3.3% plunge in Disney’s stock price from September 17 through Monday, erasing roughly $5 billion in market value and amplifying investor concerns about the company’s vulnerability to partisan pressures.
“Disney’s stock suffered significant declines in response to the abrupt suspension, which appeared to be in response to political threats,” the investors wrote in the letter, first reported by Semafor. They argued that the decision reflected a failure of the board’s duties of loyalty, care, and good faith, potentially exposing executives to legal liability for elevating “improper political or affiliate considerations above the best interests of the Company and its stockholders.”
Legal Push and Free Speech Concerns
Leading the legal charge is Roberta Kaplan, the renowned attorney who secured a landmark defamation verdict for writer E. Jean Carroll against former President Donald Trump. In a statement to CNBC, Kaplan emphasized the broader stakes: “A bedrock of the United States and the key to our survival as the world’s oldest democracy is freedom of speech. The government cannot and should not threaten to punish someone simply because it does not like what they have to say. And while large media companies have been at the front lines, they too should not succumb to unconstitutional threats or blackmail.”
Disney has not publicly responded to the letter as of Friday morning, but sources close to the company described the suspension as a temporary measure to mitigate advertiser pullouts and FCC complaints, insisting it was not influenced by political directives. The entertainment giant has faced mounting scrutiny over its content decisions in a polarized media landscape, including earlier this year when it delayed a biopic on civil rights icon John Lewis amid conservative pushback.
Kimmel’s Return and Industry Tensions
Kimmel, 57, has remained defiant in the face of the saga. In his return monologue on Tuesday, he quipped, “I’m back, and apparently, so is the First Amendment – at least in some zip codes.” The show’s viewership spiked 15% upon his return, according to Nielsen data, though the affiliate blackouts have limited its national reach.
The investor demand comes at a precarious time for Disney, which is still reeling from a proxy battle earlier this year where activist investor Nelson Peltz unsuccessfully pushed for board changes. Analysts warn that if the groups pursue litigation – a step they have not ruled out – it could further erode investor confidence and invite regulatory probes into Disney’s relationships with affiliates.
