Dan Loeb invested $1 billion in Disney. But he's demanding sweeping changes to the company's operations.

Third Point Management is a hedge fund founded by Daniel Loeb, who recently announced his $1 billion investment in Disney $DIS. Of course, the stock reacted with a rise from the first, but what happened next may surprise you. Loeb wrote a letter to Disney's CEO after revealing this huge investment, outlining some demands for changes in the company's operations.

Daniel Loeb is a billionaire American investor and hedge fund manager at Third Point.

Hedge fund Third Point disclosed a stake of about $1 billion in Walt Disney $DIS and said it plans to push the media company to make a number of changes. We'll take a look at his demands today, as Loeb didn't hesitate too long to share his thoughts in a letter.

First point: spin off ESPN

ESPN is a global sports cable and satellite television station.

In a letter to Disney CEO Bob Chapek, Loeb said there is a strong case that the ESPN business should be spun off, noting that the segment generates significant free cash flow for Disney.