Disney ‘Fesses Up

The Disney Company has fallen on hard times, with one movie after another bombing or, at a minimum, failing to live up to expectations. Disney’s troubles are widely blamed on its far-left corporate culture, which prioritizes pushing woke themes over entertaining the masses.

But is that how Disney sees it? Yes, actually. A site called That Park Place has reviewed Disney’s most recent 10K filing with the Securities and Exchange Commission, and John Nolte comments at Breitbart.

First, though, a general observation: there is one place where companies have to tell the truth, and that is when they are disclosing risks to potential investors. If they don’t tell the truth about the risks they are aware of, they can get sued. Thus, for example, a few years ago a friend forwarded to me a couple of private offering statements that had been used in connection with the development of wind farms. Under the heading “risk factors,” these statements spelled it out bluntly: the investments made no sense if evaluated in a competitive market. They depended entirely on government mandates and subsidies, and if the political winds were to shift, the investments would fail.

So what does Disney say about risks to its profitability? Most of it is boilerplate. Disney depends on “consumer tastes and preferences for entertainment, travel and consumer products,” which can be fickle:

We face risks relating to misalignment with public and consumer tastes and preferences for entertainment, travel and consumer products, which impact demand for our entertainment offerings and products and the profitability of any of our businesses. Our businesses create entertainment, travel and consumer products whose success depends substantially on consumer tastes and preferences that change in often unpredictable ways. The success of our businesses depends on our ability to consistently create compelling content, which may be distributed, among other ways, through broadcast, cable, theaters, internet or mobile technology, and used in theme park attractions, hotels and other resort facilities and travel experiences and consumer products. Such distribution must meet the changing preferences of the broad consumer market and respond to competition from an expanding array of choices facilitated by technological developments in the delivery of content. The success of our theme parks, resorts, cruise ships and experiences, as well as our theatrical releases, depends on demand for public or out-of-home entertainment experiences. Demand for certain out-of-home entertainment experiences, such as theater-going to watch movies, has not returned to pre-pandemic levels. In addition, many of our businesses increasingly depend on acceptance of our offerings and products by consumers outside the U.S. The success of our businesses therefore depends on our ability to successfully predict and adapt to changing consumer tastes and preferences outside as well as inside the U.S. Moreover, we must often invest substantial amounts in content production and acquisition, acquisition of sports rights, launch of new sports-related studio programming, theme park attractions, cruise ships or hotels and other facilities or customer facing platforms before we know the extent to which these products will earn consumer acceptance, and these products may be introduced into a significantly different market or economic or social climate from the one we anticipated at the time of the investment decisions. Generally, our revenues and profitability are adversely impacted when our entertainment offerings and products, as well as our methods to make our offerings and products available to consumers, do not achieve sufficient consumer acceptance.

Fair enough. And I am sure that anyone thinking about investing in Disney stock would understand that.

But then we have this (emphasis added):

Further, consumers’ perceptions of our position on matters of public interest, including our efforts to achieve certain of our environmental and social goals, often differ widely and present risks to our reputation and brands.

There you have it: Disney takes positions on “matters of public interest,” and has “goals” that are “environmental and social,” about which people “differ widely.” Since the public “perceives” Disney’s positions and goals, there is risk to the company’s profitability.

But Disney doesn’t care. Its management puts woke ideology ahead of shareholders’ returns. I would like to know when Disney first added this statement of risk to its corporate disclosures. Certainly the Disney of my youth had no need to do so. That company didn’t take positions on divisive subjects or have “environmental and social goals” as to which consumers of entertainment are deeply divided. At some point, Disney stopped being a unifying force, a producer of high-quality entertainment for the mass market, and became an ideologically-driven, niche company intent on bringing about social and political change–change that most Americans are not on board with.

We were pretty sure that was true, but it is nice to see Disney’s management put it in black and white.