Activist investor Daniel Loeb is calling on Disney (DIS) to permanently suspend its annual dividend, and reallocate that money toward building out original content for its fledgling streaming platform.

The company suspended its dividend in the first half of fiscal 2020 to mitigate the impact of the COVID-19 crisis, which shuttered many of its amusement parks and hammered the entertainment division. In August, Disney’s CEO said the company would make a decision on whether or not to declare a dividend in the second half in “very late November, early December.”

In a letter reviewed by Yahoo Finance to Disney CEO Bob Chapek ahead of the company’s upcoming Investor Day, Loeb praised the company’s focus on direct-to-consumer (DTC) business, and bringing “marquee content” like “Hamilton” and “Mulan” to Disney+, which has been a major hit since its launch last year.

Highlighting Disney+’s success, Loeb — the CEO of hedge fund firm Third Point LLC — said that management needs to continue capitalizing on what has become a “transformational opportunity.” Disney is Third Point’s largest equity holding, with 5.5 million shares, according to the fund’s most recent 13-F filing.

Toward that end, the firm believes Disney “should permanently suspend its $3 billion annual dividend and redirect this capital into content production and the acquisition for Disney’s DTC businesses, centered around Disney+,” Loeb wrote in the letter, dated Oct. 7.

Loeb’s view is that by removing the dividend, the company could “more than double its Disney+ original content budget.”

According to Third Point’s analysis, this move could “generate returns that are multiples of the stock’s current dividend yield by driving high life-time value (‘LTV’) subscribers” to Disney+, which costs consumers $6.99 per month.

However, Loeb estimates that a single Disney+ subscriber is worth “well north of $100” based on the entertainment giant’s offerings, and the willingness of consumers to pay for content like “Hamilton” — which recreated the monster Broadway hit for Disney+’s audience.

“These are substantial returns when compared to the mere $75 million it cost Disney to acquire rights to the film,” Loeb wrote.

Loeb added that he’s “fully confident” that redirecting the billions spent on dividends toward Disney’s “iconic in-house brands like Marvel, Star Wars, Pixar, and Disney Animation, as well as selected acquisitions would drive even greater subscriber growth for Disney+, and subsequent value creation for Disney’s shareholders.”

Elsewhere, Loeb made a case that the company should collapse all of its DTC services into the Disney+ offering to “simplify the product” and enhance its content.

“Given that Disney+’s subscriber base is already meaningfully larger than any of your other DTC services, we believe Disney would benefit from a single customer acquisition vehicle led by Disney+,” Loeb argued.

The current offerings from sister brands like Hulu, ESPN+, which serve different audiences, can be bundled together at other price points, he added. “Importantly, all product offerings should lead with the company’s marquee Disney product and brand,” said.

Loeb also noted that while a “more aggressive investment strategy” may put pressure on short-term earnings, it’s the way to generate long-term value.

“Disney deserves growth-minded, long-term oriented investors, and we believe that a strategy centered around using Disney’s many resources to drive growth in the DTC business will further attract them,” Loeb wrote.

Shares of Disney (DIS) ended the session up 1.64%, near $123.

Julia La Roche is a Correspondent for Yahoo Finance. Follow her on Twitter.

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