Months after doing battle with Florida Gov. Ron DeSantis over the state's new parental rights in education law, Walt Disney Co. this week saw shares sink to their lowest level since March of 2020, making for its worst overall year since 1974 as Market Watch reports.
Company officials had been hanging their hopes on a strong box office showing from Avatar: The Way of Water, but that did not materialize, at least to the extent needed to prevent the stock slide.
It is not surprising that Disney had substantial expectations for the sequel to the first blockbuster Avatar film, and though the movie did bring in $134 million in the U.S. and had the second-best worldwide opening of the entire year, it was not enough to meet or exceed advance estimates.
A key driver of the disappointing results, according to the Wall Street Journal was the production's ticket sales in China, where the first installment in the series was a massive hit.
Disney distribution executive Tony Chambers told the outlet, “The problem is nobody wants to go to the cinema, because they've been told that COVID is extremely dangerous. Although the cinemas are open, the appetite for going to them isn't really there.”
As a result, Disney's stock plummeted 4.8% on Monday, and its shares have dropped a staggering 44.6% over the course of the year.
Avatar's underwhelming performance is by no means the only reason behind Disney's recent struggles, as CNBC reports, as the company's various arms continue the process of recovery from pandemic disruptions at theme parks as well as movie theaters.
Given these challenges and repeatedly missed revenue targets, the Disney board last month ousted CEO Bob Chapek and reinstalled former corporate head Bob Iger in his place.
Not long after, Iger made it clear that he would be initiating a shakeup in the ranks of top Disney management and beginning a renewed focus on restructuring the company's media division, according to CNBC.
Despite its long and storied history in Florida, Disney made what in retrospect looks like an ill-advised decision to wade into state politics earlier this year by publicly taking aim at the Republican-backed Parental Rights in Education bill, which prohibited classroom instruction related to gender identity and sexual orientation for kids in kindergarten through third grade.
After activists inaccurately began referring to the measure as the “Don't Say Gay” bill, then-Disney CEO Chapek declared that the company would no longer make political contributions in the state.
Responding to internal company outrage that management had not initially reacted more strongly in opposition to the bill, Chapek addressed Disney employees in a letter that read, “It is clear that this is not just an issue about a bill in Florida, but instead another challenge to basic human rights.”
“You needed me to be a stronger ally in the fight for equal rights and I let you down. I am sorry,” Chapek added.
Not content for a multi-national corporate enterprise such as Disney to exert undue interference in a matter of state legislation, DeSantis took swift action in signing into law a measure eliminating a special self-governing status the company had long held in the geographic area around its Orlando properties, as NBC News noted at the time.
As a result of the law, Disney lost a spate of special tax privileges the company had enjoyed since the 1960s, a heavy price to pay for its attempt to encroach on the state's public education system.
In revoking the company's special status, DeSantis explained, as CBS News noted at the time, “You're a corporation based in Burbank, California, and you're gonna marshal your economic might to attack the parents of my state. We view that as a provocation, and we're going to fight back against that.”
Earlier this month, a report in the Financial Times suggested that lawmakers in Florida were considering a “compromise bill” designed to reverse their earlier actions against Disney's special tax status, as Forbes noted, something that would surely come as welcome news to Iger.
However, a DeSantis spokesperson quickly shot down that suggestion, saying succinctly that the governor “does not make U-turns,” and that may be among the many reasons he is viewed as a strong potential contender for the Republican presidential nomination in 2024.