Report: Wokeness A Mouse Trap For Disney

Cable cord cutting is eating into Disney’s linear businesses, including its still-profitable sports cable network ESPN, according to Charles Gasparino at The NY Post.  He adds the Disney+ streaming service is growing, but still losing money. ESPN along with decent theme-park attendance is why the company posted strong third-quarter results. Disney is betting big on streaming but it may not be the magic bullet many industry pros hoped for, or Netflix wouldn’t be missing performance targets.

Gasparino also write there are the unstated reasons Disney is in trouble, the one that industry executives, investors and rivals will tell you when they’re not being quoted by name: Woke don’t sell, particularly when it comes to a company trying to sell kid-oriented programming and theme-park experiences to Middle America.

Dan Loeb

In his recent letter to Disney CEO Bob Chapek, acitivist investor Daniel Loeb didn’t say any of this. (He also declined to comment for this column.) His letter stated explicitly he wants an outright sale of ESPN to pay down debt and allow ESPN to make up for the cord cutting and fully flourish in the sports gambling business, which doesn’t fit with Disney’s family-forward image. He’d like to totally suspend the dividend and buy from rival Comcast the remaining 33% stake of the Hulu streaming service it doesn’t own.

Disney is beginning to learn that woke does not sell, states Gasparino.

But Loeb, in Gasparino's opinion, also more than hinted at wokeness being a growth albatross for the “House of Mouse.” He wants more experienced board members to fill “gaps in talent and experience” that he described as “strengths in technology, advertising and consumer engagement, as well as proven track records of leading large, complex organizations and creating shareholder value.”

So I did a little digging through the company’s 2022 proxy statement — a type of annual report that investors, including presumably Loeb, pore through to understand management’s priorities, strategic direction, shareholder votes and what it looks for in its board members — the men and women whom management must report to.

Bob Chapek

You would be amazed how Disney — a company known for, among other things, Mickey Mouse and making movies that are supposed to appeal to the so-called silent majority — is openly bragging to investors about its embrace of ­every woke fad imaginable.

The terms “diversity” and “ESG,” the acronym for Environmental, Social and Governance, appear on nearly every page. Management diversity is a worthy goal, but real academic research on diversity and shareholder value shows no correlation.

This follows Disney speaking out against DeSantis' anti-LGBT legislation. 

Florida passed legislation that took away Disney’s special tax status earlier in 2022. It was an easy win for DeSantis, and a humiliation for Chapek, who should just start making non-provocative kids’ flicks again or the Dan Loebs of the world will keep coming, concludes Gasparino.