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Inside Disney and internal corporate boardroom drama. Iger appointed Chapek as his successor but ended up decided coming back. It touches on the fight with Desantis, the prior generation deciding not to retire, internal power struggles, managing a business where no one has the skillset for all of the businesses (creative, running parks, international, finance, sports, launching a streaming business). About a 15-20 min. Iger seems more interested in the Desantis fight than Chapek who just wanted to play nice.
https://www.cnbc.com/amp/2023/09/06/disney-succession-mess-iger-chapek.html
Disney's 2023 releases have been duds
https://www.forbes.com/sites/carolinereid/2023/08/04/the-four-flops-of-2023-that-cost-disney-1-billion/?sh=4e9e00b13bed
Losses on some, profits on others. I don't see how a $100 million loss on a movie can cause a decline of market value in the tens of billion. mediocre movies cannot explain why the stock has fallen so much. Disney has always produced a lot of mediocre but expensive movies throughout its recent history [1], yet the stock has done so well , until 2022. The value is in the IP and other services, not so much box office. A movie that loses money at box office will still generate $ decades down the line through IP.
[1] https://screenrant.com/disney-biggest-box-office-bombs-disasters/#a-wrinkle-in-time-2018
Disney's stock is losing value quickly because D+ isn't working and they have a big payment to buy out their Hulu partners rapidly approaching (and Hulu isn't doing hot either).
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To the extent this is correct, it is because you’re looking at the stock price through the wrong frame. The big rally into 2022 was due to Star Wars and Marvel climaxing at the same time in 2018-2019, followed by the pandemic fed-tech bubble. The 2019-2022 price level isn’t the baseline, it’s the outlier.
Disney has outperformed or tracked the S&P 500 as far back as it began trading. 2022-2023 is a huge outlier in terms of bad relative performance . from $200 to $80 in just a year vs spx almost having recovered its losses. i think you could be right that the stock may have simply gotten ahead of itself due to Star Wars and Marvel hype wearing off, combined with some costly unforced errors, changing sentiment, woke backlash, etc. .
As someone who was in the machine for a few years, you're correct in that the value is in the IP.
And they've trashed their IP.
The missing thing everyone tends to overlook is merchandising. Consumer Products was an extreme overperformer in Disney's catalog during the Marvel golden years and the first of the Star Wars sequel trilogy. Add to the ocean of Frozen merchandise... Disney makes significant gains on both product and selling the license to produce product for their brands, backed by a minimum guarantee sales agreement. Their IP did so well that they basically bullied toy and product companies into accepting whatever terms they wanted in order for access to their properties.
This is why The Last Jedi was so significant for Disney. It was a movie where the demand for product basically imploded. Hasbro lost their ass on it, and due to the poor performance of that movie's products as well as the chaos of getting anything approved by Disney for that movie (and the increasingly short turnarounds for Marvel ones in time for movie releases), it basically heavily damaged Disney's relationship with a lot of the toy and product guys.
Bear in mind Consumer Products did so well that they merged it with Parks to try and hide the black hole of Parks spending, mostly driven by overspending on development of new attractions, construction and cost overruns in upkeep.
If your company's value is the value of your IP, the price going through the floor is indicative of how the company is doing at IP management. Faith in Disney's ability to effectively monetize the IPs they own is critically low.
That has been a problem with parks too. They build these (occasionally amazing) rides but they are so expensive, take so long to build, and actually don’t move many people.
Disney had an amazing ability to create truly interesting fun unique rides that moved a lot of people. Sure the ride was expensive but not that expensive.
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Outside of some weird cases like airlines, the value of a stock is a function of expected future earnings. Shareholders may have been convinced in the past that there was potential in owning DIS. They are no longer so confident.
Disney may always have had duds, it's the cost of doing business in that industry. But I believe what the market has realized is that they have lost the ability to make the popular entertainment that makes the duds worth it. It's not a stroke of bad luck, it's skills shortage.
Marvel is winding down massively, Star Wars has been blown up for nothing, Pixar is way past it's prime, the parks aren't making much money and the political spats have tarnished the image of family friendliness that has always been a core part of Disney's strategy.
They bought so much they own all of classic pop culture and yet I'm left asking: who is going to care about Disney IP in ten years? Versus, say, Nintendo.
Wait, how do airline stocks work?
Long video
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Airlines are banks. You read that right. Flying is both such a necessary service and so unprofitable that it slowly has become a subsidized activity of companies whose main business is actually controlling a currency in frequent flier miles which other, actual, banks will buy and integrate into the rest of the financial system.
Banks behave differently than other businesses because they're a peculiar kind of business that's allowed to print money and is so important to the economy there is an expectation that the State will bail them out of a crisis. And so it is with Airlines.
As Taleb point out in Black Swan such enterprises are in the business of hiding risk. The stock price then isn't properly understood as a bet on earnings (at least not for the most part), but as a bet on the solvency of the State and its willingness to enact a bailout in the next crisis. A bet on the solidity of the financial system and how much that particular part of it can act as a safe haven.
The key similarity is that neither industry has much in the way of moats. They tend to be too competitive as there is nothing to prevent new entrants from boosting supply.
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I'm not following why airlines are like banks. When I think of a bank I think of a company that makes money either by lending money or by investing and providing other financial services. Airlines sell frequent flier miles to credit card companies who use them as an incentive to get customers to sign up which doesn't seem like the same thing. For example if a bank offers a free toaster to anyone who opens a savings account that doesn't make KitchenAid a bank. That seems analogous to how credit card companies use the airline miles they buy. I assume I'm missing something here.
I also don't get how their shareholders are betting on a bailout instead of their financials. For example, American Airlines got a bailout during Covid but their stock is still down to a third of what it was before the pandemic so it's not like the investors made out like bandits.
And this is indeed what Airlines do. They sell credit services and benefits directly and administer their own mini-financial system as a main activity.
Transportation is not just a secondary activity, it's actually a loss leader. They consistentlyt lose money on operating plane trips to the tune of a few cents per seat and the disclosures we got during covid's loan season show the loyalty programs are worth more than the total market capitalization of the airlines which implies the transportation sides of the business have negative value.
But what if KitchenAid started selling free toaster vouchers to banks for more than their market price? What if financial instruments started getting valued in those vouchers? What if there was an exchange rate for different voucher types? What if this was the main way they make any money?
The real magic here is in the fact they sell miles from their loyalty programs to other companies (like AA to Hertz) so they get the incentive benefits. These are sold at a markup, and the customer pays back the balance by flying. Given these miles are printed from nothing, they look very much like loans. Actually it's not quite from nothing, it's from the future expectation of the ability to fly, which is not really that different from the future expectation to redeem your money from a fractional reserve bank.
This makes the airline a sort of central bank of their own service backed currency that can, and does, adjust the value by controlling the supply and redeem rate. And importantly, this currency isn't taxed so it's possible to create weird tax free financial instruments using these, in a way that's really not dissimilar to how cryptocurrencies work today.
I think that's a smart evolution of the business, although I wouldn't say there's any particular magic in this step either. This still falls under the universal logic of IOU issuance: anyone can issue their own IOUs (printed from nothing) and decide both what it takes to get one and what the redemption value will be.
I guess what moves it to feel more 'bank-like' is that the airlines take tracking accounts in their database very seriously, compared to less serious bearer punch-cards for free Subway sandwiches or whatever. And flights are more universally desirable, compared to more subjective businesses. Maybe I will use Hertz instead of Avis if it's giving me $X towards my next flight on my usual airline, but for some reason if they were partnered with Mcdonalds reward points, it would take a lot more than $X to move the needle.
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They don't.
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Basically this.
They burned a bunch of bridges and are now acting surprised at the lack of foot traffic, much like Anheuser Busch, one gets the impression that they didn't understand who their core market were.
I think it's a little different than AB. AB knew their market but they wanted a different one because their current market didn't comport with their political goals, and besides they didn't expect it to be around much longer with the fulfillment of those political goals. Disney thought they owned their market and it didn't matter what they put out, their market would accept it.
Can you really blame them? The Starwars/Marvel "consooom" crowd were pretty hardcore in their merch consoooming ways. I honestly didn't expect them to have a spine either, certainly didn't expect them to have enough spine to reject the new Trilogy and its merch.
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There's an idea for a "so blackpilled you come out through the other side as whitepilled" effort post that's been bouncng around my head for a while, where these would be used as prominent supporting examples.
Lead by their theory of Cultural Hegemony progressives moved to capture the commanding heights of our culture, only to discover that power doesn't literally let you bend the world to your will. Provisional title: "Congratulations, you've won the crown! Now you have to wear it..."
Dramatization
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I'd genuinely like to read that.
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"Not understanding core market" is a long way from "small pr stunt goes wrong". I don't think management could have imagined it would have such a long and lasting impact as what it has become. In the past, a bad PR stunt would probably be forgotten as the news cycle changes and the old product line is discontinued (the Dylan Mulvaney cans were a one-off thing, not a product line), but social media keeps it alive in perpetuity. In 1996, McDonald's Arch Deluxe burger is a notable example of a major brand misreading a market, but it did not have a lasting impact like this has. Congrats, i guess, to Kid Rock for having more of an impact on a stock price than famous billionaire short sellers like Bill Ackman, Jim Chanos, Michael Burry etc. He should get a job at a hedge fund.
I don’t think it’s quite the same as the Arch Deluxe. There’s no real insult with the arch deluxe, it was a sandwich, and it didn’t taste good, but it didn’t cross any major lines. It didn’t offend your values, it didn’t call into question your masculinity, it didn’t celebrate things you hate. It was just a bad sandwich.
The Budlight thing was basically tying the brand to something that the main audience of Bud Light was opposed to — which is woke in general and gay/trans in particular. There’s also the issue of the perception that Bud Light is now not a man’s drink. I think especially in bars this was part of the deal. No man wanted to be seen drinking the tranny beer, and likely that will continue for quite some time.
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Hard disagree. This isn't hyberole or an uncharitable strawman, Heinerscheid straight up said that "we don't want bud light to be the beer of frat-boys and rednecks anymore", and she succeeded.
In short @ArjinFerman is more intelligent than you.
how is that even relevant. yet again HlynkaCG is able to break rules with impunity here and get endless warnings
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Okay, really, what was the point of this comment?
The rest of your post was fine. "The other person is right and you're wrong." You can say that.
But you have a pattern, which you've been repeating for a long time now, of adding gratuitous little elbow shots that add absolutely nothing except antagonism. You're clearly doing it on purpose, and I don't exactly understand why. It does not fit at all with all your Grizzled Old NCO schtick in which you act like you're just trying to keep out the riff-raff (despite this no longer being your job) and point out the truths that us jannies won't acknowledge. No, this is purely you being a dick to people you don't like. Sometimes it feels like you're testing us, sometimes it just looks like you can't control yourself. Maybe it's a disgust reflex. Whatever. But you need to stop.
You still get more leeway than most people here because you have such a long history as a positive contributor, including AAQCs which you continue to generate. A lot of people who really hate you have been angry about this for a long time and keep demanding we ban you. I don't know when or if you will force us to do that, but giving people who have earned more community "credit" a longer leash is intentional and has always been our policy. That said, you have not earned infinite goodwill and do-overs, and if you keep testing us, eventually we'll have to say good-bye.
In light of multiple previous infractions of a very similar nature, I'm giving you a one-week ban this time.
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Do you think they wanted their whole entire core market to stop drinking their beers?
If one takes Alissa Heinerscheid's statements at face value, yes that is exactly what the management of InBev wanted.
If you actually believe that then I don't know what to tell you
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It wasn't "a small PR stunt going wrong" it was "deliberately insulting the core demographic buying your product".
Because they were bad products, not attacks on their core market.
yeah with the benefit of hindsight we can say it was an attack on a core market
Disagree - almost anyone with vague ideas about american culture would have been able to tell that it is a bad idea. Only single white college educated woman deep in the blue bubble that has drank the DEI cool aid wouldn't have known. Guess what type they had recently promoted as vice marketing director.
If you were in the marketing department at AB and someone said “hey, why not send a one-time promotional can to this influencer that she’ll only market to her (highly woke) progressive following and that our core audience will never even hear about?” what would you say to convince them of how badly things would go?
It’s not really predictable, tons of red-tribe-friendly corporations have done much more woke things than what AB did and still retain that entire audience. Red tribers still subscribe to Netflix, still watch Disney movies, beloved right-adjacent brands like Chick-fil-A went full DEI and other than some Twitter users nobody cared, the core oo-rah red tribe demographic sports league, the NFL, went full woke, even NASCAR went woke. None of them saw a major backlash that convinced them to backtrack (yes, there was Kaepernick, but the NFL is still ultra-woke).
Predicting that a promotional can of Bud Lite would set this off wasn’t obvious.
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I guess. but companies are always do weight/wacky promotions to generate 'buzz'. Think of Burger King's various weird promotions . The assumption is, a misfire will be forgotten and society will move on. But not this time. If I were a hedge fund manger, and then Kid Rock video just came out and I had to make a call if society would move on or it would have a lasting impact, I would be in the former camp. yeah I was wrong.
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You don't need the benefit of hindsight, the recording of the marketing exec will do just fine.
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