Yahoo Finance ‘Quiet the noise’: Disney's CEO hints at ceasefire in ongoing culture war with Florida, social conservatives — while unveiling plans to invest $60B in theme parks and cruise ships
Walt Disney chief Bob Iger has hinted at a possible ceasefire in the culture war between the global media and entertainment conglomerate and its socially conservative critics — telling investors the company will “quiet the noise,” according to an analyst report obtained by Reuters.
Disney (NYSE:DIS) has been in a protracted legal battle with Florida Gov. Ron DeSantis since 2022 — a dispute that kicked off when the entertainment giant protested the state’s so-called “Don't Say Gay” bill, which banned classroom discussion of sexual orientation or general identity for Florida public school students between kindergarten and Grade 3.
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When then-Disney CEO Bob Chapek spoke out against the law, officially called Florida’s Parental Rights in Education, DeSantis responded with an aggressive campaign against “woke Disney” and worked with state legislature to strip the company of its 56-year-standing “independent special district” status — which allowed Disney to create its own regulations, building codes, and other municipal services.
Despite the ongoing legal battles (which seem to be escalating lately, according to a report in Fortune) it seems Disney’s new boss is keen to change the discourse and recover the trust of investors — after the company’s stock fell to a low of $80.57 in early September, a far cry from its peak price of $197 in March 2021.
Disney’s growth plans
In an investors’ presentation on recently at the Walt Disney World Resort in Orlando, Florida, Iger announced the company’s plans to spend $60 billion on theme parks and cruise ships — almost doubling its investment — over the next decade, according to a report in the New York Times.
Whether those park investments will happen in the Sunshine State remains to be seen.
“We want to keep growing and investing and have ambitious plans in Florida,” Josh D’Amaro, chairman of the parks division, told the New York Times. “For the benefit of our guests, our cast members and the economy of central Florida, we hope the conditions will be there for us to do so.”
Meanwhile, the giant is struggling to make its streaming business profitable and figure out a viable future for its television networks.
When announcing Disney’s growth plans this week, Iger wrote in a blog post: “We’re incredibly mindful of the financial underpinning of the company, the need to continue to grow in terms of bottom line, the need to invest wisely so that we’re increasing the returns on invested capital, and the need to maintain a balance sheet, for a variety of reasons.
“The company is able to absorb those costs and continue to grow the bottom line and look expansively at how we return value and capital to our shareholders.”
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Is this a good move for investors?
After attending the investors’ presentation in Orland, Needham media analyst Laura Martin wrote a report, which was then obtained and shared on X by CNBC host Kelly Evans.
In the report, Martin says the company’s pivot from streaming (via Disney+) to parks, ships, hotels and timeshares got her wondering about what the move might reveal about what Disney assumes will be its growth drivers for the next decade. And she appeared skeptical that parks is the correct focus for the company.
“We worry that the strong margins and ROICs (return on invested capital) at Parks today are related to the cyclical rebound from the forced COVID park closures in 2020 and 2021, and therefore $60 billion of capital allocations are being made based on unsustainable and elevated profit margins,” she wrote.
“The ROICs of physical assets is almost always lower and riskier than the virtual world. We like the idea that growth can return to [Disney], but we believe that [Disney’s] valuation multiple based on Park [revenue] growth would be materially lower than expected [revenue] growth for films, TV and streaming, as it has been historically.”
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
