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Wall Street Ignores the Pretend Backlash Against Disney

May 11, 2022, 8:33 PM · Today's investors call with Disney CEO Bob Chapek might be most interesting for what it did not include than for what it did.

If you're not familiar with the drill, every three months publicly traded companies such as Disney are required to file a quarterly financial report with the U.S. Securities and Exchange Commission. These reports include data on a company's income, expenses, profits and losses over the previous three months. As such, they are invaluable information for investors - and would be investors - thinking about which stocks to buy, hold, or sell.

Big companies inevitably host public conference calls with leading investors immediately after releasing their quarterly reports. Top executives answer questions about the report from the analysts at select banks and brokerages - the people who will be recommending whether their clients buy, hold or sell the company's stock. These question-and-answer sessions not only provide executives such as Disney CEO Bob Chapek and CFO Christine McCarthy an opportunity to frame the company's performance in the best possible light, they also reveal what Wall Street is looking at - and looking for - when evaluating a company.

In today's 30+ minute Q&A session, no analyst asked a single question about the Walt Disney World Resort's Reedy Creek Improvement District. There were no questions about attempts to roll back Disney's copyright protections. No one asked about consumer boycotts or protests of Disney over the company's belated opposition to anti-LGBTQ+ legislation in Florida.

Given the amount of attention that these stories have gotten in national media over the past month - including in countless mentions in online forums and on social media - one reasonably might think that these are the most important business challenges facing The Walt Disney Company today. But for the people whose jobs it is to follow Disney and analyze its financial importance, these issues did not merit a single question in the time they had today with Chapek and McCarthy.

Why could that be? Having been interviewed by Wall Street analysts about Disney in the past, I can assure you that these professionals are thorough in their research. They read and watch the same news as everyone else. But they also look for context that explains that news through financial reports and other government and business records, and in conversations with other analysts and industry experts.

As I have written before, what Florida Gov. Ron DeSantis and his Republican allies are doing to Disney by trying to dissolve Reedy Creek is political theater. Florida lacks the clear political authority to abolish the RCID, and any attempt to actually stop its function without a massive payoff to the company no doubt will be met with immediate legal challenge from Disney.

Proposals from the Republican minority in the US Congress to roll back copyright protections also have zero chance to advance. And as much as some people on TV and online might like to pretend that the public will rise up to boycott Disney - that ain't happening. Fans are filling Disney's theme parks, selling out showings of its new movies, going to its Broadway shows, subscribing to Disney+ and buying millions of dollars in Disney-branded merchandise.

The backlash against Disney is a right-wing media fantasy, and Wall Street knows that. It might drive views and clicks for Fox News and right-leaning websites and forums, but it has zero impact on Disney's bottom line. After all, Disney doesn't own any of those. As since all this sound and fury means nothing to Disney's business, it is not worth analysts' limited time with Chapek and McCarthy to discuss. Instead, they asked about Disney+, a potential DTC (direct to consumer) version of ESPN, the future of Disney's movies in China, whether inflation will affect spending in Disney's theme parks, and whether the international parks will see the same yields that Disney is enjoying now at its U.S. parks.

In other words, stuff that really does affect Disney's income.

Previously: Disney Parks Report Surge in Income for Second Quarter

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