Shareholders in the Walt Disney Company have a lot to be unhappy about lately. Anyone unlucky enough to have purchased its stock on March 12, 2021, has lost over 52% of his investment at yesterday’s closing price.  Simply Wall Street comments:

In the wake of The Walt Disney Company's (NYSE:DIS) latest US$15b market cap drop, institutional owners may be forced to take severe actions[.] (snip)

• Significantly high institutional ownership implies Walt Disney's stock price is sensitive to their trading actions

• The top 25 shareholders own 38% of the company

And that’s not all. The company announced yesterday that it is abandoning two huge projects, one of which has been operating and is to be closed down – apparently an unsuccessful large investment -- while the other represents a big plan that is being abandoned. The agitprop media focused mainly on the abandoned plan, seeking to blame Florida Governor Ron DeSantis, while comparatively ignoring the existing investment that hasn’t panned out and has to be written off. An insightful article written by Legal Insurrection founder William A Jacobson lists some of the coverage the media pounce:

But, as Jacobson incisively notes:

But if you read the details, the reality is that Disney cancelled one small part of its Florida plans for less than $1 billion, and kept almost all its other plans. And even that $1 billion was not such a sweet deal for Florida, since it was subsidized by over $500 million in tax incentives, and there were doubts that the job growth, which was by transferring employees from southern California, even could happen.

He quotes the misleadingly titled New York Times article on the subject, Disney Pulls Plug on $1 Billion Development in Florida:

The project, known as Lake Nona Town Center, was supposed to cost $864 million, but recent price estimates have been closer to $1.3 billion. Disney had planned to relocate as many as 2,000 employees from Southern California, including most of a department known as Imagineering, which works with Disney’s movie studios to develop theme park attractions.

Most of the affected employees complained bitterly about having to move — some quit — but Disney held firm, partly because of a Florida tax credit that would have allowed the company to recoup as much as $570 million over 20 years for building and occupying the complex.

He cited “changing business conditions” as a reason for canceling the Lake Nona project. “I remain optimistic about the direction of our Walt Disney World business,” Mr. D’Amaro said in the memo. He noted that $17 billion was still earmarked for construction at Disney World over the next decade — growth that would create an estimated 13,000 jobs. “I hope we’re able to,” he said. [emphasis added by Jacobson]

The memo, which was viewed by The New York Times, did not mention Mr. DeSantis. But the company’s battle with the governor and his allies in the Florida Legislature figured prominently into Disney’s decision to cancel the Lake Nona project, according to two people briefed on the matter, who spoke on the condition of anonymity to discuss private deliberations….

A spokesman for Mr. DeSantis said in an email: “Disney announced the possibility of a Lake Nona campus nearly two years ago. Nothing ever came of the project, and the state was unsure whether it would come to fruition. Given the company’s financial straits, falling market cap and declining stock price, it is unsurprising that they would restructure their business operations and cancel unsuccessful ventures.” ….

It also turns out that the canceled project was the baby of the recently removed Disney president and was always opposed by the returning CEO:

“Mr. Iger, who came out of retirement to retake Disney’s reins, was much less enthusiastic about the project — even before the company became mired in its battle with Mr. DeSantis. As soon as he returned to Disney, Mr. Iger began telling lieutenants, for instance, that it made little sense to move Imagineering so far away from Disney’s movie studios. As he is fond of saying, “Creative teams need to be together.”

Mr. Iger has been systematically reversing Mr. Chapek’s decisions.”

These facts, contradicting the Times’s own headline, vitiate the attempt to blame DeSantis for the canceled project.

The other cancellation is a bigger humiliation --  a failed, highly touted investment that must be written off, as CNBC reports:

Disney World’s Star Wars: Galactic Starcruiser, a two-day hotel experience, is closing and will make its final voyage this September after being open for only more than a year.

The experience blends elements of the company’s resorts, cruise lines and theme parks into a 48-hour romp in space. First teased during Disney’s D23 Expo in 2019, the Galactic Starcruiser, located near the company’s Orlando, Florida-based Disney World Resort opened in March 2022.

The voyage costs around $1,200 per person per day, with family packages reaching closer to $6,000 for the two-day excursion. That can be a hard number to digest, especially considering a typical Disney vacation for a family of four can cost that much for a week-long trip, depending on hotel and restaurant choices.

YouTube screengrab

Closing a brand-new investment after just over a year of operation suggests a major blunder. My outsider’s guess is that the company misjudged how many people would be willing to pay such a steep price for s mere two days, especially as the nation seems to be headed for (or already is in) a recession.  

It is unclear how big a write-off the company will have to take, but CNBC offers a hint:

Disney reportedly spent $2 billion to construct its two immersive Star Wars parks in Florida and California — though it is unclear if the cost of building the Starcruiser is included in the sum.

I think the total cost of Disney alienating roughly half of its customer base by identifying itself with radical sexual politics will only mount in the future and cost its shareholders still more. I have yet to see a business case made for its policies. In my opinion, it represents staffers pushing their personal agendas at the expense of shareholders.