Disney admitted foray into politics, culture wars hurt its bottom line in SEC filing: Jonathan Turley

The Walt Disney Co. seems to have admitted "its controversial political and social agenda" has hurt the company and shareholders, according to Jonathan Turley. 

Turley, a George Washington University law professor and Fox News contributor, used the 300th birthday of famed economist Adam Smith, whose "invisible hand" metaphor explained how people could exercise their choice between particular products, to put a spotlight on Disney's struggles. 

"Disney appears to acknowledge that Smith’s invisible hand is giving the ‘House of Mouse’ the middle finger. In a new corporate disclosure, Disney acknowledges that its controversial political and social agenda is costing the company and shareholders," Turley wrote in a piece for The Hill. 

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Turley then cited a recent SEC (Securities and Exchange Commission) annual report in which Disney acknowledged that "we face risks relating to misalignment with public and consumer tastes and preferences for entertainment, travel and consumer products." 

"In an implied nod to Smith, the company observes that ‘the success of our businesses depends on our ability to consistently create compelling content,’ and that ‘Generally, our revenues and profitability are adversely impacted when our entertainment offerings and products, as well as our methods to make our offerings and products available to consumers, do not achieve sufficient consumer acceptance. Further, consumers’ perceptions of our position on matters of public interest, including our efforts to achieve certain of our environmental and social goals, often differ widely and present risks to our reputation and brands,’" Turley wrote. 

He noted that Disney and other companies ignore consumer backlash over corporate campaigns and that the company "reportedly lost a billion dollars just on four of its recent ‘woke’ movie flops" but has "continued to roll out underperforming movies" as revenue dropped. 

"For shareholders, it may seem counterintuitive that corporate executives would trade off profits for political or social agendas. However, it does serve as a rationale for individual corporate executives who are professionally advanced when they champion such causes," Turley wrote. 

Turley pointed out that Bud Light exec Alissa Heinerscheid famously said the brand needed to drop its frat boy reputation and was "heralded by colleagues, even though her move went on to tank that brand as a whole."

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"In fairness to Disney, there is an expressive element to its products. Movies are artistic creations that emphasize certain motivations and values. At one time, those values included some that are now viewed as offensive, including racist tropes," Turley wrote. 

"The question is the balance and degree of the political and social agenda. Disney’s products are now viewed by many conservatives as empty virtue signaling and endless attempts to indoctrinate children," he continued. "Moreover, when the company publicly declares its opposition to a popular parental rights bill in Florida, it is moving away from a commercial to a political focus."

This, according to Turley, is exactly the problem with the invisible hand. 

"You can bring movies to the public, but you cannot make them sell. Once an unassailable and uniting brand, Disney brand is now negatively associated with activism by a significant number of consumers. The company is now even reporting a decline in licensing revenue from products associated with Star Wars, Frozen, Toy Story and Mickey and Friends — iconic and once-unassailable corporate images," Turley wrote. 

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"The question is how long Disney (or its shareholders) can tolerate falling revenues tied to its ‘misalignment with the public.’ It is a massive corporation and it can lose billions before facing any truly dire decisions," he added, noting that CEO, Bob Iger appears ready to tone down the company’s involvement in culture wars. 

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Disney made headlines with its battles with Florida Gov. Ron DeSantis over his legislation critics derided as "Don't Say Gay," and has taken some criticism from conservatives over the nature of some of its recent films and reboots. Iger said last year at a town hall that his goal was to quell controversy for the good of the company.

Disney didn't immediately respond to a request for comment.