Activist Asks Why Disney’s Approval Crashed (NYSE:DIS)

Who is Disney’s (NYSE:DIS) new activist?

Disney just received an activist letter from Strive, a new asset manager focused on shareholders that runs the Strive 500 (STRV).

They were founded to serve client interests over political agendas in contrast to woke alternatives such as BlackRock (BLK).

What do they want?

Strive questions how Disney’s woke politics helps its shareholders. It is a great company worth saving from ill-conceived politicization. Demand for parks and entertainment is strong post-Covid. Disney+ subscriptions continue to grow. Park sales are up and there is demonstrable pricing power. But the current board and management are imperiling their brand by taking on controversial political positions and alienating most of their customers.

Disney briefly stays out of politics

One example is Florida’s parental rights in education bill, which barred teaching on sexual orientation and gender identity to little kids between kindergarten and third grade. Most Republicans were for the bill. Most Democrats were for the bill. In fact, over two-thirds of Americans overall were for it. And Disney tried to stay out of it… for a brief while. 58% of poll respondents oppose companies wading into political disputes and that view is likely shared by Disney’s owners.

Then flips

But after two days of political pressure, Disney came out in opposition to the bill. They also tried to make $5 million peace offering to the Human Rights Campaign. Apparently, it wasn’t up to the task as HRC rejected the payment. Disney went on to plan a multi-state political campaign against similar legislation elsewhere. When the Florida bill was signed into law, Disney said that it wasn’t the end of it and that they would fight for its repeal or for its reversal in the courts.

Disney v Florida hurts DIS owners

This didn’t appear to serve the interests of Disney shareholders. 61% of their consumers opposed Disney’s political campaign. Parks were protested. At least some customers boycotted. More broadly, 87% of poll respondents said they are likely to stop using services of companies that advocate for political agendas. Data suggest that these losses are not compensated for with political supporters of politicized companies.

Disney lost their special tax district, costing shareholders over $10 million per year. With that, the company ceases self-governing. The stock reaction quantified the loss in the mid-10-digits. Disney’s battle with Florida also got the company ensnarled in an onerous political anti-discrimination statute that they would have otherwise been exempt from.

Whether or not you like this particular Florida law is not the point. At least one anonymous internet troll is virtually certain to be angry about it. The point is whether the conversation serves Disney’s goal to,

Make people happy.

In my experience, people screaming at each other about politics seem quite the opposite. I mostly try to steer clear, and have reallocated my energy to fitness and finance. Disney would be well-advised to steer clear, too, and get back to business and in their case back to fun.

Disney tips

Strive offers an action plan for Disney: commit to staying out of politics. Break the precedent so that future silence becomes unremarkable. I love Disney (disclosure: my wife used to work there as a “hostess in Fantasyland” which was not as exciting or debauched as I imagined) and hope that the company follows Strive’s proposal. If you want to visit Disney World, my two pieces of advice are first to run in their marathon and visit their parks that weekend. It is a fun race and scheduled for a weekend with relatively light traffic. Secondly, absolutely positively go with a Disney Private VIP Tour Guide. They massively undersell this (I think they intentionally bury the lede to avoid overly inflaming the masses). They market it as offering insights and flexibility. Not that clear what that gets you. Opaquely they offer the ability to enjoy rides efficiently. Again, a bit fuzzy for what you are paying but we’re getting warmer. My unsubtle pitch (sorry masses):

YOU GO IN THE EXITS!

Yeah, you trot past multi-hour lines and slide up to the front. Lines are for socialists. This way is much better. You can get in a week’s worth of rides in the single weekend. 100% worth it.

TL; DR

Buy DIS. Buy STRV. Make money in the market so you never again have to wait in line.