Battle of the 31%ers

As of a couple days ago, Disney is up 31% for the year. In that same period Tesla is down 31% for the year.

Both companies are facing serious challenges: Disney has long relied on linear networks like ABC and Disney and Freeform and others for both profitable income and to spread the gospel. (It’s a lot easier to turn Moana into a Disney Princess when you have lots of distribution eyes to help.) But linear networks are collapsing along with the traditional cable industry, so that’s a problem.

Likewise ESPN has relied on the heavy tariff of cable users who paid almost $10 month for the channel whether they watched it or not which allowed ESPN to bargain high for sports rights and placement. But that, too, is going away, even as leagues start thinking about running their own operations for streaming.

Theme parks, an ever reliable segment is still doing fine, and prices go up again, and everybody seems miffed but understanding, so I don’t worry about this one too much.

And last, the movie business. They’ve gone from have the Top 5 movies in a single year to having none of the top 5 as the Superhero franchises wear out, StarWars goes small, animation is tired, etc.

And, of course, boardroom intrigue as “activist investors” push to have board seats and light a fire under Igor.

Tesla has its own set of challenges: serious competition from BYD in its largest market: China, and perhaps soon in Europe, and possibly down the road in the US via a plant in Mexico to sneak in under possible tariffs.

In fact, looming competition everywhere, coupled with a diminution of overall demand (still growing but at a far slower pace) for EVs, and growth for hybrids where Tesla does not have an entry.

It appears that the pickup will sell, but won’t be a game changer, and the company really hurts for a low-price entry which won’t be available for some time. And of course, margins on that, as well as the rest of the lineup, are far below what was being produced just a year or two ago.

There is pressure to eliminate tax breaks, and FSD now seems a pipe-dream, although Elon has mandated that every car delivered must be accompanied by an in-person demonstration of it (such as it is) before the car can be turned over. This smacks of an attempt to upsell a cost-less addition to goose margins (and it might work!), but it’s a clear change of strategy and will slow down the delivery process significantly.

And there’s the distraction factor of the CEO, of which enough has been said already.

Anyway, the battle of the 31%ers. Interesting fodder for investors.

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I wonder which side is doing the smoking… :slightly_smiling_face:

The Captain

In related news:

Disney, DeSantis-backed board reach settlement agreement
https://thehill.com/homenews/state-watch/4559406-disney-desantis-board-settlement-florida/

Snip:

The agreement reached Wednesday stipulates that development plans approved by the previous board before DeSantis took over would be “null and void.” Disney has also agreed to dismiss a separate state case involving public records.

Sure reads like a loss for Disney. Not sure what the defendant gave up in that agreement.

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Tesla’s BOD says Musk is doing a lot of smoking.

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Not much? “In the settlement agreement reached Wednesday, Disney has agreed to dismiss multiple active lawsuits against CFTOD.”

Iger has an existential (to him as CEO) battle to fight against Peltz.

DB2

The district’s DeSantis-appointed board chairman resigned this month along with another fella. Both were Disney critics. They were replaced by a longtime Orlando businessman who worked in tourism (Mateer) and a person named Kopelousos who was once a lobbyist for Disney. Kopelousos will be the new district administrator.

I think Disney got most of what they wanted.

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I think you may be confused as to whom is the defendant in this case.

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Can’t say as I’ve followed it, be my assumption was that there were lawsuits on both sides. What are you saying?

DB2

It looks like Disney won’t be expanding in other states as some here have suggested.

Michael Hundgen, Walt Disney World site portfolio executive, told CNN that the expansion is “probably the largest” the resort has ever done in Magic Kingdom.

DB2

The problem with expanding in other states is most of the states with decent weather are run the same as Florida.

Steve

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No real need to since it appears that Disney got most everything it wanted and is back to business as usual.

  1. The board is now being run by Stephanie Kopelousos who most believe is friendly to Disney.

  2. The agreement has this interesting paragraph:

Mitigation Credits. As a material inducement to Disney in entering into the Agreement, the District acknowledges Disney is the owner of, and the District shall not prohibit or impede, but rather assist in the use of, Long-Term Permit Mitigation Credits or other entitlements created through:
a) South Florida Water Management District Environmental Resource Permits Nos. 48-00714-S, 48-00714-P, and/or and 48-00714-8-22, as amended;
b) Department of the Army Permit 199101901 (IP-GS) and/or SA3-1991-01901 (SP-TSD), as amended;
c) State of Florida Game and Fresh Water Fish Commission Permits Nos. OSC-4, OSC-SSC-1, and/or OSC-TSR-1, as amended.

In other words, Disney retains the major benefits it had prior to the Desantis kerfuffle. Furthermore, the “independent” board is explicitly restricted from messing with those benefits.

  1. Disney retains the right to sue Florida for violating its right of Free Speech, considered the strongest of the Disney legal actions. This is seen as a powerful motivator for the board to negotiate favorably with Disney. It virtually literally states: “Allow us to expand however we want or we will sue your rump!”

Disney agrees to seek, and the District will not oppose, permission from the court to defer briefing in Disney’s pending federal appeal captioned as Walt Disney Parks and Resorts U.S., Inc. v. Governor, State of Florida et at, Case No. 24-10342 (11th Cir.) (“Federal Lawsuit”), pending negotiations among other matters of a new development agreement between Disney and the District.

You can read it here: Ron DeSantis Claims Victory Over Disney And All He Had To Do Was Give Disney Everything They Wanted - Above the Law

Meanwhile, Disneyworld is once again hosting its Gay Pride weekend at the end of May. https://www.onemagicalweekend.com/

I am having a hard time finding anything that conservatives won against Disney.

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That agreement will last exactly as long as Disney toes the line. They go out of bounds, and the state will be on their case again.

Steve

It’s over because DeDantis doesn’t need the issue right now. He’s not a candidate again for another 2 1/2 plus years. That’s almost always how politics works.

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We have some numbers on Disney’s Florida expansion.

DB2

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