A foreigner's opinion on Walt Disney's debts, or bailouts
Disney is too big for something else, not failure.
Should the United States government consider a “bailout” similar to banking and automotive for companies like Disney?. That article explains that:
- like everybody else in the entertainment industry, Disney has lost lots of money to the COVID-19 pandemic
- thanks to its major intellectual property (IP) franchises, such as Star Wars and Marvel, Disney has mitigated the losses by “releasing direct-to-stream features for Disney Plus, such as Mulan and streaming-only TV series such as The Mandalorian”.
- Even before the pandemic, Disney had a lot of debt, mainly due to purchasing FOX Entertainment, in 2019: net debt of $41.31 billion in August 2020
- “It’s entirely possible that Disney could lose as much as $20B in revenue from Q3 of 2020 to Q3 of 2021."
- If (as a consequence of the pandemic) theater box office revenues never return to 2019 levels, “we could be looking at a long-term crash or the complete dismantling of the motion picture and entertainment industry as we have known it”
- Such a crash would have similarly devastating impacts on retail shopping and restaurants that are “attached” to theaters
Hence the question: “do we let the entertainment industry fall”?
“Disney is one of the largest and most prestigious of American corporations. A faltering of this company would likely be catastrophic for the entire entertainment industry, one of the few industries in which the United States still maintains a global leadership role…[and] could cause significant systemic issues within the US economy”
“Should the United States government consider a “bailout” similar to banking and automotive for companies like Disney? A large-scale debt restructuring?"
Also Disney’s assets could “end up for sale to the only other companies with enough cash to buy them wholesale, or in large pieces, such as Apple and Amazon, and Netflix, and existing media/telecom/cable infrastructure giants such as ViacomCBS, AT&T, Comcast, and Charter Communications”.
A foreigner’s opinion on bailouts for Disney
I am not a US citizen, so it’s not my own money that would be used to bail out Disney. However, I think everybody, American or not, should consider some extra Disney facts, when pondering whether Disney is too big to fail or not:
- Disney’s lobbying is a major reason why ridicule copyright abuses like these (Harry Potter, Winnie Pooh, Barney, 2007), this (Disney, 2013) or this (Tolkien, 2014) can exist
- Ridicule aside, in just three years from now (January 1st 2024) Disney will have no more copyright for Mickey Mouse’s original version. This may be just the beginning of another, non-negligible, permanent loss of revenue for Disney, regardless of pandemics
- Disney has a stranglehold on the streaming industry, so strong that it needs to be broken up, for the sake of cinema
- Above all, entertainment is culture, and education, and soft political power
Entertainment cannot be a monolithic single point of failure, or control. Disney is not too big to fail: it is too big to remain around.
Disney has taken a lot of flak for lack of diversity in its movies, and still takes it, to the point that it nominated a New Exec to Increase Focus on Diversity & Inclusion, just two months ago. But if real cultural diversity is valuable, and of course it is, a company like Disney should be let die, and of course its IP should be put in the public domain. Because passing such a monopoly to companies like Apple, Netflix etc… would solve none of the real problems listed above.
Image sources: “Disney Raises Additional $1.3 Billion in New Debt”.