It has been a rough go for Disney recently. They had an earnings report that beat expectations, but those expectations were in the trash. They also announced that they were letting go of not 28,000 employees but 32,000 employees due to covid. ABC News and ESPN are both cutting employees. Executives are even feeling the blade’s edge. These are all news items to celebrate. There are also reasons for caution.
Disney has spent decades amassing a content catalogue that gives them a lock on the entertainment industry. The latest acquisition that was part of this collection was the Fox purchase, giving them control of maybe half the entire catalogue of American pop culture. What has it given consumers? Reboots, remakes, sequels, Marvel and baby Yoda are what Americans gorge on in theaters. Disney purchased Star Wars to fumble it so badly that they had to cancel the anthology series of films. Even Pixar has entered the sequel system.
We should celebrate the potential demise of this behemoth. It has the knock on effect of ruining ABC (and it’s news division) as well as cause Woke ESPN’s ruin. It is bad enough that Disney’s entertainment properties set up opposing sides that are often, if not always, multi-ethnic group of good guys commanded by a while female versus a nearly all-white group of bad guys commanded by a white male. The poison is in the moments where the leviathan is arranged so that ABC has a special 20/20 interview with Bruce/Caitlyn Jenner about coming out trans, that filters through ABC News stories on the trans moment that culminates in an ESPN televised special where Jenner receives a special award for being trans to an applauding audience.
Seeing this shatter because of property mismanagement is a positive. Would they have to sell intellectual property? It is possible. Does a firm that makes billions off of ancient fables while simultaneously extending copyright of their new creations for decades deserve ruin? Yes. Disney is just another near monopoly that exerts pressure to engage in crony capitalism. The live action Mulan was a flop when rolled out on Disney+, and the longer covid lockdown theater continues, the worse their debt situation gets. Shattering the giant media entity would be creative destruction.
We cannot count on this though. Disney has seen hard times before, and because of its size and usefulness for cultural control, there are always entities willing to fun it to keep it in place. Disney ran into problems thirty years ago, with their C-suite tag-team of Eisner and Nanula using Saudi money to restructure debt and lay the groundwork for the giant we see today. One possible process could be selling off pieces and skinnying down as Citigroup has done since the financial crash.
The question though is why this late in the cycle would we expect a giant propaganda outlet act any different than every other facet of the regime that has received bailouts? The giant must be sustained for its scale and reach to the masses even if profitability is dodgy. The other argument to support politicians and power brokers propping Disney up will be the jobs saved by doing such a bailout. Remember during Obama’s first term when job creation was abysmal? They touted jobs saved. Same could be done here, with the same marketing deployed. Disney not only employs hundreds of thousands directly but indirectly pads the bottom line of countless vendors.
This is not just to salvage the Orlando area or Anaheim. Think of every contract Disney puts out there, and the bidding that is done on it. Those mega-contracts are ways that different companies scale up their business. The messaging will be saving all those small firms that rely on the tourism for Disney properties, but these vendors are all large corporations as well with an army of lobbyists. To add to this Disney bailout crowd, the debtholders are going to use Disney as Connecticut hedge funds used Greece. Disney took on massive debt recently to purchase Fox. All money for the Disney corporation, with accompanying media imagery of Mickey Mouse with empty pockets, will pass through Disney and into the hands of bondholders to make them whole. This has been the process since the Mexican peso crisis in the Clinton administration. Bondholders do not take haircuts.
The message will be no one wanting to see those areas hollowed out in America. The reality is we are just keeping bondholders whole. Will a Biden Treasury and FED orchestrate such a bailout? We can always ask one of Disney’s most famous current employees: Nate Silver. It’s just a 50/50 yes/no outcome, but he must be setting the odds at 99.3%.