Not even Disney can live on dreams forever

LOS ANGELES (BLOOMBERG) – The post-Covid-19 “return to normal” that Americans long for is far enough away that not even a company built on dreams can see it.

Walt Disney Company on Tuesday (Sept 29) said it will let go of an astonishing 28,000 employees at its US theme parks, which include Walt Disney World and Disneyland, as the coronavirus continues to prevent those businesses from fully reopening. Disney’s California locations remain closed because of state restrictions, while the Florida parks have been operating with limited capacity and weaker attendance than Disney anticipated. It’s clear that for families weighing the risks of travel and crowds over the reward of getting out of the house, the virus won out.

While Disney has pointed a finger at California Governor Gavin Newsom, upticks in the virus in pockets of the country may keep many consumers fearful of venturing to crowded venues anyway. Of the 500 millennials recently surveyed by Morning Consult, only 26 per cent said they feel comfortable going to an amusement park. The same was true of only 16 per cent of baby boomers. As far as when they would consider a visit, 42 per cent of the US adults polled said it would be more than six months from now. The movie-theater industry has encountered a similar setback: Doors opened, the hit film “Tenet” was showing, and few people showed up. As I wrote then, people won’t necessarily resume their normal activities just because they can.

In fairness to Disney, visitors and journalists who have gone to the reopened Disney World in Orlando say the safety protocols – and adherence to them – are downright impressive. Still, consumers are understandably apprehensive, even if it’s just about traveling there. That there is a recession and high unemployment also doesn’t help when Disney is counting on people spending more than US$100 per person (S$136.80) per day just to enter one of its parks. Neither does the lack of federal relief. Last year, Disney’s business unit comprising theme parks, cruises and consumer products accounted for 37 per cent of total company revenue – more than its television networks or film business (though both ultimately fuel the global fascination with the Disney brand). It furloughed 100,000 theme-park and resort workers in April, holding out hope that the recovery would be quick and strong enough to bring them back.

Disney CEO Bob Chapek ran the theme parks before he took over Disney’s top job in February. That was just before the pandemic took hold. He replaced Bob Iger, who retired after 15 years at the helm. Mr Chapek’s experience is especially fitting for this moment, but it’s also a bit incongruous with the direction the company was heading even before Covid: a future dominated by streaming-video entertainment. It hasn’t changed course because of the virus. In fact, Disney has pushed deeper into streaming in recent weeks, having its highly anticipated live-action remake of “Mulan” skip theaters to premiere directly on the Disney+ app for a US$30 viewing fee.

“Normal” is starting to fade from the vocabulary, and we must let it go. But the question is, if theme parks and movie theaters don’t rebound, or at least not for some time, will Disney even be the same company anymore?

Of the 500 millennials recently surveyed by Morning Consult, only 26 per cent said they feel comfortable going to an amusement park. PHOTO: EPA-EFE

Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote a mergers & acquisitions column for Bloomberg News.

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