What is Disney to do when a five billion dollar investment isn’t allowed to stay open? The entire Disney Parks division continues to be damaged by China.
When Robert Iger sealed the deal to put a Disney Resort in the middle of Shanghai, China, astute thinkers might have pondered whether or not dealing with communist dictatorships is a wise idea. Now after having watched the prior president of China frog marched out of a meeting in an ominous sign of strengthening authoritarianism, leadership at Disney is likely very concerned. China is going more and more extreme, likely heading towards conflict with the west, and The Walt Disney Company is stuck with a huge problem. What do you do when a massive investment sits squarely in the middle of a potential war enemy and has control of your intellectual properties? Is Disney ready to see China invade Taiwan, have their resort taken from them, and Mickey Mouse used to propagate CCP propaganda in front of a Disney castle?
It’s not off the table.
Chinese former President Hu Jintao mysteriously escorted out during the 20th Congress meeting.#China #XiJinping #HuJintao #ccp pic.twitter.com/tfk2SLooCW
— Tarm News (@TarmNews) October 22, 2022
One thing that is off the table is the reopening of Shanghai Disney Resort — again — for the foreseeable future. The theme park hub, second only in size to Walt Disney World, is off-limits once more as China doggedly pursues an impossible “zero covid” strategy that involves attempting to eradicate one of the world’s most communicable diseases through economically devastating lockdowns. It makes one wonder what it is that China knows that would make them choose such a route over either living with the disease or vaccinating against it. Why would a ruthless regime bent on taking over the world economically choose to do something that hamstrings their chances?
That’s a topic for another day. What is pertinent for now is that Disney is currently stuck in more ways than one. Owning and operating a theme park resort that isn’t allowed to stay open by the government is unsustainable. In the years prior to COVID, Shanghai Disney was welcoming over 11 million guests per year. That’s small compared to other resorts, but the expectation was that it would grow exponentially. And that’s still revenue of $1.4 billion in 2019. In 2020, 2021 and now 2022, that number has been radically reduced. And yet so much of the expenditures are baked into the cake. Even when Shanghai Disney Resort is allowed by the Chinese Communist Party to be open, the park is often reduced in capacity to such a degree that Disney either operates at a loss or at break-even.
There will be no major complaint out of the China Disney management though. Doing so would destroy their government-approved social credit scores, plus much of Shanghai Disney’s management have CCP flags on their desks at work.
And if you think all of that is enough of a headache for Disney to deal with in China, don’t forget that when things lock down, international guest are often completely stuck with no solution.
Visitors unable to leave Shanghai Disney without negative Covid test as park shuts https://t.co/cgXKR9fk2I
— BBC News (World) (@BBCWorld) October 31, 2022
Maybe… just maybe… it’s time for Bob Chapek to divest away from one of the biggest mistakes the former Bob made. The Disney chinese parks are simply too risky, too controlled and too much of a ticking time bomb for the company to continue supporting.
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