Six Reasons to Worry about Disney in 2024 and Beyond
I recently discussed how Bob Iger has reset Disney’s course and has improved its overall position.
Sadly, we’re not out of the woods yet, though. Plenty could still go wrong.
Here are six reasons to worry about Disney’s future.
Financial Struggles
A TikTok influencer recently became the bane of my existence when the person coined a phrase that immediately went viral.
Have you heard the term “vibecession” yet? If not, oh, how I envy you…
Anyway, the definition of a vibecession is when the economy is strong, but the opinion persists that it’s not.
You could argue that this vibe reflects the intricacies of a so-called trickle-down economy.
Conversely, I could make the point that the economy is remarkably good right now. The problem is how it gets reported.
Many media companies sell more ads by generating more clicks by fostering this sort of illogical, anti-factual reporting.
No matter where you stand on the issue, Disney will remain a publicly traded company for many years to come.
For this reason, Disney will stay vulnerable to the whims of economic unrest.
The company even mentioned the economy as one of the uncontrollable issues that could stop theme park expansion.
Currently, Disney stock is hovering in the mid-90s. As long as it doesn’t fall into the upper 70s/low 80s, everything is fine.
During an election year, some people are oddly incentivized to tank the economy, though. So, it’s gonna be a stressful year.
Attempted Power Grabs
Let’s call this one the Perlmutter/Peltz Power Grab.
When Disney has witnessed a slippage of its stock price, activist investors have jumped into the fray.
The goal of these investors is to slam Disney in the media, knowing full well that the Wall Street Journal will amplify everything.
Again, that ties back to the vibecession statement. Negative news performs better than positive news, which is baffling to me.
Financiers like Peltz have two goals when attempting to gain more control over Disney.
The first is that they pressure Disney and CEO Bob Iger into making the company more profitable in the short term.
Investors rarely care about a company’s long-term stability, only its short-term stock price.
For example, Peltz’s previous attempt to push his way onto Disney’s Board of Directors earned him a cool $150 million.
That’s the Wall Street liquidator playbook right there. Step one: be a callous jerk. Step two: profit.
Peltz and Perlmutter share a second goal with their power grabs, and they’re not alone.
People know that anyone sitting on Disney’s Board gains a seat at the table in determining the company’s overall strategies.
That sort of power even surpasses the potential financial gains of such endeavors.
Bob Chapek never fully appreciated this and almost warmly welcomed Peltz. The Board interceded, but it was that close.
Politics
Of course, we cannot discuss Perlmutter and Peltz without mentioning one of their frustrations.
Both individuals fit the profile of the Florida right-wing billionaire.
In fact, Perlmutter is such a loyalist that he may have…been the ”shadow rulers of Veteran Affairs” under Donald Trump.
Many of Disney’s most vocal opponents have expressed dismay over what they perceive as a woke company.
One of them, Ron DeSantis, just finished second in Iowa’s Republican caucus, albeit at a hefty price tag of $8,500 per vote.
Disney currently finds itself suing someone who is one of the likeliest people to serve as President in 2025, although the Governor has technically dropped out of the race.
Sometimes, I look back and wonder how Disney even found itself in this position. And the explanation almost doesn’t matter.
Instead, what must happen is for Disney to stay out of politics as much as possible, which is easier said than done.
As with the economy, some people are incentivized to attack Disney for cheap political points. Disney works well as clickbait.
For this reason, 2024 contains many potential landmines for Disney.
Iger’s primary hope here is that nothing else causes an escalation.
Also, it’d be nice if Disney stopped coming up during live political debates among major candidates.
That’s a real thing that has been happening over the past three months if you didn’t know.
Expansion Concerns
Speaking of DeSantis, Disney deftly gave itself power on development of the former Reedy Creek Improvement District.
DeSantis later persuaded Florida politicians to roll back those changes.
In fact, Florida recently gained oversight over the monorail system and is ready to perform inspections.
Disney faces an odd challenge right now. It wants to expand its theme parks by investing $60 billion.
However, the more popular political party in Florida at the moment seemingly hates Disney and will interfere regularly.
I’d like to think this issue may not prove as precarious as it looks on paper, but the Central Florida Tourism Oversight District exists.
That’s reason enough to believe that Disney’s expansion plans must overcome some utterly ridiculous hurdles.
Universal as a Rising Threat
Here’s a reason that will crescendo in 2025, but it bears mentioning now.
In the short term, Disney has apparently completed most of its expansion projects at Walt Disney World.
We’re currently awaiting announcements for what comes next, with Disney recently hinting it may involve Frontierland.
In 2024, Universal Orlando Resort will introduce the re-themed DreamWorks Land, an updated version of the former KidZone.
While the change will be nice, I suspect this update will get overhyped, and I apologize in advance if I accidentally contribute to that.
Anyway, the real threat occurs in 2025. That’s when Universal Epic Universe opens to the public.
On that date, Universal will claim the first new Central Florida theme park of this scale during the 21st century.
Presumably, Epic Universe will include many state-of-the-art features that will place Disney on the defensive.
So, this concern functions as a byproduct of Disney’s own expansion issues.
Florida’s current politicians in power quite like Universal and are perfectly happy to work with them.
In fact, Florida recently gave Universal a special tax district named the Shingle Creek Transit & Utility Community Development District.
DeSantis signed this legislation after he claimed that Disney would no longer get special benefits and that all theme parks would be created equal.
Spoiler: they’re not. Universal is still writing big checks as political donations.
Disney stopped that practice when it feuded with DeSantis.
A lot of stuff we’re discussing here is connected.
Succession
Finally, we have the lingering problem that won’t go away until everything suddenly changes forever.
In February 2020, after many false starts, Bob Iger suddenly retired as CEO of Disney, leaving the company the following year.
We all know how that turned out, as Chapek’s struggles directly led to Iger’s return in November 2022.
Recently, Iger extended his contract until the end of 2026. Throughout 2024, we’ll hear stories about likely successors.
Eventually, Disney will pick one, and the whole thing will be over. Until then, this story will remain prominent.
I plan to post some updated Next Disney CEO power rankings in a few days. But there’s really no rush.
Most analysts would be surprised if Disney confirmed its choice over the next six months.
So, this concern will linger. Actually, most of the ones we’ve discussed today aren’t going away anytime soon.
I think 2024 is gonna be a looooong year, folks.
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Feature Photo: Disney