Amidst the price hike,Disney Parks Guests keep visiting and keep spending

Posted on by Mathew Corn Animal Kingdom, Disney Dining, Disney Parks, Disney Resorts, Disney+, Epcot, Hollywood Studios, Magic Kingdom, Uncategorized

For all the grumbling in the atmosphere from Disney Parks fans who have had their fill with The Walt Disney Company‘s affinity for price hikes at each theme park, Guests sure are spending more while on their Disney vacations.

During The Walt Disney Company‘s Fiscal Year 2022 Quarter 2 earnings call on Wednesday, Disney CEO Bob Chapek and Disney CFO Christine McCarthy had lots to share about the good things happening inside the House of Mouse, including an increase in theme park operating income, better-than-expected Disney+ subscriber growth, and perhaps not quite as earth-shattering losses due to Hong Kong Disneyland and Shanghai Disneyland being closed for part or all of the quarter.

“Our strong results in the second quarter, including fantastic performance at our domestic parks and continued growth of our streaming services, with 7.9 million Disney+ subscribers added in the quarter and total subscriptions across all our DTC offerings exceeding 205 million, once again proved that we are in a league of our own,” said CEO Bob Chapek during the call.

When it came to theme park operating income for The Walt Disney Company, Disney’s Parks, Product, and Experiences division reported impressive numbers–numbers that suggest that despite months of unrest over Disney’s newly-revamped (and newly re-priced) Annual Passholder programs at Disney World and Disneyland Resort, increases in food prices in the parks (and smaller portions reportedly being served), and in other prices, Disney Guests are still showing up and still spending cash.

A press release from The Walt Disney Company ahead of Wednesday’s earnings call said it all:

“Disney Parks, Experiences and Products Disney Parks, Experiences and Products revenues for the quarter increased to $6.7 billion compared to $3.2 billion in the prior-yearquarter. Segment operating results increased by $2.2 billion to an income of $1.8 billion compared to a loss of $0.4 billion in the prior-yearquarter. Higher operating results for the quarter reflected increases at our domestic parks and experiences businesses and, to a lesser extent, at our international parks and resorts and merchandise licensing businesses.”

Disneyland Resort

And there was seemingly no attempt to cover the fact that Disney has indeed raised prices for many things across the board, leading to increased profits.

“Operating incomegrowth at our domestic parks and experiences was due to higher volumes and increased Guest spending, partially offset by higher costs. Higher volumes were due to increases in attendance, occupied room nights, and cruise ship sailings. Cruise ships operated at reduced capacities in the current quarter while sailings were suspended in the prior-yearquarter. Guest spending growth was due to an increase in average per capita ticket revenue, higher average daily hotel room rates, and an increase in food, beverage, and merchandise spending. The increase in average per capita ticket revenue was due to a favorable attendance mix and the introduction of Genie+ and Lightning Lane in the first quarter of the current fiscal year. Higher costs were primarily due to volume growth, cost inflation, and higher marketing spending.”

See the World at Your Walt Disney World Resort Hotel - D23

It may be the last time the Disney executives can be so chipper on an earnings call for a while, thanks to even more upset about CEO Bob Chapek‘s recent statement about Florida’s Parental Rights in Education bill, followed by the Company’s admitted determination to see the bill repealed. Many Disney Parks fans feel that Disney is attempting to “indoctrinate” children with some of its recent content, leading many to “boycott Disney,” even if only verbally.

Florida slaps 'woke' Disney World? Can ban be selective?

However, the recent events involving Disney, DeSantis, and Reedy Creek didn’t transpire until the current quarter, meaning the bad news can be pushed aside for a little bit longer. The third-quarter earnings call might have a completely different tone to it.

Is Disney Working Behind the Scenes With DeSantis to Help Him “Save Face” Regarding Reedy Creek?

Posted on by Mathew Corn Disney Parks, Uncategorized

It has been almost two weeks since Florida Governor Ron DeSantis signed a bill that will officially dissolve the Reedy Creek Improvement District in June 2023. The bill was the culmination of the weeks-long battle between DeSantis and the House of Mouse over Florida’s controversial Parental Rights in Education bill. The bill has been dubbed the “Don’t Say Gay” bill, and critics believe it unfairly targets the LGBTQ+ community. Disney CEO Bob Chapek has said that Disney will work to see the bill struck down in the courts.

While DeSantis has signed the Reedy Creek bill and said that it will go through, he faces an intense and steep, uphill legal battle to actually made that happen. There are a number of Florida laws standing in his way, and he knows that. Disney also knows that. Disney sent a note to shareholders not long after the bill was signed, saying that it plans to continue with current operations while exploring all the legal options it has available.

Reedy Creek

One of the biggest issues that DeSantis faces in dissolving Reedy Creek is the bonds that were issued by Reedy Creek just 4 years ago. Those bonds cannot be redeemed until at least 2029, so if Florida wants to dissolve Reedy Creek it would be responsible for paying out those bonds — which are more than $1 billion. Florida law dictates that the cost would be passed on to taxpayers, but DeSantis has said he will not do that and that Reedy Creek will pay.

Reedy Creek

In a new report from The Washington Post, insiders are saying that DeSantis knows that he cannot promise taxpayers that they won’t be stuck with the bond debt bill. They claim that DeSantis is working with Reedy Creek, so he can save face with his fellow Republicans and claim victory without that actually happening. Per The Washington Post:

That’s what worries local government officials, who fear that $1 billion in Disney bond debt will be dumped on them. Some analysts say the new law could mean a 20 to 25 percent property tax hike in nearby Orange and Osceola counties, which local government officials said would be “catastrophic.”

Disney has otherwise remained publicly silent about the feud and did not respond to requests for comment for this article. Sources familiar with the negotiations, who requested anonymity to discuss private negotiations, say the company’s lobbyists and lawyers have been working behind the scenes to find a solution that would allow DeSantis “to save face” and continue to claim a victory over “woke culture,” while in reality doing very little to impede the company’s massive operations in Florida…

DeSantis has brushed aside what local officials say could be calamitous consequences if Reedy Creek, which operates as its own county government, is eliminated. A statement from his office says “it is not the understanding or expectation” that the action will increase taxes. But DeSantis and his Republican allies in the legislature have not explained who will pay Reedy Creek’s $1 billion debt, or cover the $163 million in taxes it collects every year to pay for many of its theme park functions.

Cinderella Castle

At this time, Governor DeSantis has not said how he plans to get around current Florida law when it comes to Reedy Creek’s debt and its bond obligations. However, his spokesperson has said that a plan will be released in the next few weeks. It has also been shared that DeSantis is considering creating a special district headed by his own appointees to oversee Walt Disney World.

Experts are also saying that, even if the taxpayers in Orange and Osceola Counties — where Walt Disney World is located — don’t have to pay the bond debt, their taxes will most likely go up because of the attorney’s fees incurred by the state while they fight Disney.

Exec. Who Leaked Cosmic Rewind Opening Is OUT As Head of Corporate Affairs

Posted on by Mathew Corn Uncategorized

After just four months with The Walt Disney Company, Geoff Morrell is out as Disney’s Senior Executive Vice President and Chief Corporate Affairs Officer. According to a memo sent to employees, the role will now be filled by relative Disney newcomer, Kristina Schake. Schake made headlines earlier this month when she was named Disney’s Head of Global Communications. She was originally going to report directly to Morrell, but we are now learning that she will be taking his place.

While some may not know Morrell by name, they may know him as the person who leaked the opening of Walt Disney World’s newest roller coaster, Guardians of the Galaxy: Cosmic Rewind. As an Executive, Morrell was able to ride the attraction early. He shared his excitement for the ride on Twitter in February and said that it would be opening Memorial Day Weekend. Disney had not announced an opening at the time and Morrell quickly deleted the tweet, then sent out the same tweet, without the opening date. Disney did not confirm the Memorial Day Weekend opening until April.

Disney CEO Bob Chapek sent the following memo to employees, announcing Morrell’s departure. The memo was shared with Deadline:

Team-

I am writing to share the news that Geoff Morrell, our Chief Corporate Affairs Officer, is leaving the company to pursue other opportunities. Fortunately, the strength and experience of our existing leadership team—including relatively new all-star hires—means there is no shortage of talent to guide our reputation-driving functions. With Geoff’s departure, I am pleased to share the following changes:

First, Kristina Schake will lead The Walt Disney Company’s communications efforts, serving as our Executive Vice President, Global Communications reporting directly to me. In this expanded role, Kristina will have oversight for corporate and segment communications and continue to be our chief spokesperson. Our business segment and content communications leads will continue to dual report to both division leadership and corporate communications, now led by Kristina.

We are incredibly fortunate to have Kristina with us at this important time. Her 30-plus years of experience includes roles leading President Biden’s COVID-19 vaccine education program, communications for Instagram, and leadership positions in political campaigns and the Obama White House. Kristina has a strategic approach and collaborative style, as well as relentless optimism and a strong appreciation of our brand and its place in the world. These attributes will be invaluable as she works to protect and enhance our reputation, and I am thrilled to be working with her more closely.

Next, Government Relations and Global Public Policy will now be led by our General Counsel, Horacio Gutierrez. Since joining the company earlier this year, Horacio has integrated seamlessly into the Disney family, and has quickly become a valued advisor to me and the leadership team on a wide range of issues. His extensive experience leading these areas will be incredibly useful in driving our efforts.

In addition to his current direct reports, Susan Fox, Senior Vice President for Government Relations, and Yvonne Pei, Senior Vice President, External Relations, Greater China, will join Dorothy Attwood, Senior Vice President, Global Public Policy, in reporting directly to Horacio.

Finally, Jenny Cohen, Executive Vice President, Corporate Social Responsibility, will now report solely to me in her role leading our CSR and ESG efforts. Jenny is a strong leader, and has done incredible work modernizing our approach in key areas like environmental sustainability, community investment, and philanthropy.

I am incredibly confident in this team, and look forward to working with them and all of our leadership to set Disney’s course for the next 100 years of extraordinary entertainment and experiences.

walt disney company headquarters

Disney’s communications team, which until now was led by Morrell, had been struggling for weeks. Many were criticizing the company for its lack of a statement on Florida’s controversial Parental Rights in Education Bill. The company stayed quiet and only spoke out after mounting pressure. Even though they spoke out, many felt that it was too late and that the company they loved didn’t support them. There were a number of walkouts and protests.

Disney’s choice to make a firm statement against the bill only led to a new set of problems. Its denunciation of the bill angered Florida Governor Ron DeSantis and his fellow Florida Republicans. They were so upset that they created and passed a bill dissolving Reedy Creek and stripping Disney of its self-governing powers starting in 2023. The legality of the bill is still being debated. To many insiders, Morrell’s departure had been looming on the horizon for some time.

Morrell also sent an email to employees, saying, “After three months in this new role, it has become clear to me that for a number of reasons it is not the right fit.”

Disney Says Florida Can’t Dissolve Reedy Creek

Posted on by Mathew Corn Disney Parks, Uncategorized

On April 22, Florida Governor Ron DeSantis signed a bill officially dissolving the Reedy Creek Improvement Act. The Act let Disney essentially function as its own government, and its dissolution means that the company will now be beholden to the state for things like permits and necessary improvements. The dissolution bill is supposed to go into effect on June 1, 2023, but many are questioning its legality.

One of the big issues in dissolving Reedy Creek is what will happen to the bond debt that it currently has. Should the District be dissolved, then that debt — which is estimated to be more than $1 billion — would theoretically be passed on to the taxpayers of Orange County and Osceola County. However, according to the bonds that Reedy Creek sold, dissolution of the district could not legally happen until 2029 — at the earliest.

Bloomberg Tax explained how the bonds work, how Disney issued them, and what the state of Florida agreed to with the bonds.

By dissolving Reedy Creek, the legislature essentially rewrote the promises made in the district’s bond offerings. Instead of bonds backed by a special district with the power to levy up to 30 mills in taxes, the property tax bonds will be backed jointly by two governments that can only generate a maximum of 10 mills in taxes. Instead of a unified utility system with special powers to charge various fees, supported by special taxing powers, utility revenue bonds will be jointly managed by two counties subject to additional taxing and spending restrictions.

Both the U.S. and Florida constitutions place strict limitations on the government’s ability to impair its own contracts. Under the U.S. Constitution, a state can only impair an existing contract if the impairment is reasonable and necessary to serve an important government purpose. As early as 1866, the U.S. Supreme Court held that once a local government issues a bond based on an authorized taxing power, the state is contract-bound and cannot eliminate the taxing power supporting the bond. The Florida Constitution provides even greater protection from impairment of contracts.

The issue of bonds can get extremely complicated and confusing, especially if you are not familiar with buying them and what that means. While that confusion may apply to the average person, it does not apply to the state of Florida. Governor DeSantis said that he had worked with his fellow Florida legislators to figure out how everything will work with the dissolution. However, the legality of interfering with bonds when it contractually agreed not to do so will only work in Disney’s favor.

The bonds in question were utility bonds that were issued in 2018 and prohibit redemption until at least 2029. Now, technically, it may be possible for Florida to still dissolve Reedy Creek, but only if it cut a check to all of the bond holders effected and paid off the more than $1 billion in current debt.

Florida violating its bond promise is only one legal issue that the state will potentially face. Florida law also states that a specially created district can only be dissolved by a vote of the district’s landowners. On top of that, the dissolution of the Reedy Creek Improvement District could be considered unconstitutional if it was done in retaliation — which DeSantis and fellow Florida Republicans have indicated.

Several legal experts, including those well-versed in Constitutional law, have said that Florida has put itself in the perfect spot to be sued by the Walt Disney Company. Disney has said that it is exploring all of its options, but has not said if it intends to sue the state.

Florida’s House votes to dissolve Disney’s Reedy Creek Improvement District

Posted on by Mathew Corn Animal Kingdom, Disney Parks, Disney Resorts, Epcot, Hollywood Studios, Magic Kingdom

Echoing the state Senate’s vote on Wednesday, Florida’s House of Representatives voted last Thursday to dissolve Disney’s Reedy Creek Improvement District.

In a vote on Thursday, Florida’s GOP-led House of Representatives voted to dissolve Disney’s special tax district by a vote of 70 to 38. Wednesday’s Florida Senate vote passed with a vote of 23 to 16.

Some say the move is Florida Gov. Ron DeSantis’s, as he seems to have had “his guns pointed at the Walt Disney World Resort,” according to CNBC. Votes taken in the Florida House and in the Florida Senate have come as part of a special session called to discuss the dissolution of special tax districts in the state of Florida.

In Thursday’s vote, the Florida House of Representatives passed the bill that would make Disney’s Reedy Creek Improvement District a thing of the past. Established in 1967, provisions for the Reedy Creek district allow The Walt Disney Company to act as its own sort of government within parts of Orange and Osceola Counties.

Florida lawmakers first heard the proposal to dissolve the Reedy Creek Improvement District when it was introduced by Florida State Senator Jennifer Bradley. But those opposed to the proposal say that Governor Ron DeSantis is the one behind it, as he and Disney have gone head-to-head in a culture war battle over the entertainment giant’s denouncing of House Bill 1557, Florida’s “Parental Rights in Education” bill, which was signed into law by DeSantis on March 28.

Florida Gov. Ron DeSantis moves against Disney with push to eliminate special status for theme park - CNNPolitics

The law specifically prohibits classroom instruction about gender identity and sexual orientation in Kindergarten through third grade, but it doesn’t preclude casual conversation or discussion about those issues, regardless of a student’s age and grade level.

The dissolution of Disney’s long-standing special tax district has only recently been brought up for discussion. The Reedy Creek Improvement District has been around for some 55 years. The timing of a push to dissolve the district has some questioning the motives behind the move.

On CNBC’s Squawk Box on Thursday, Florida State Representative Randy Fine said that the bill to dissolve Reedy Creek isn’t in retaliation; however, he said, “when Disney kicked the hornet’s nest, we looked at special districts.”

“People wanted to deal with the special district for decades,” he said. “Disney had the political power to prevent it for decades. What changed is bringing California values to Florida. Floridians said ‘You are a guest. Maybe you don’t deserve the special privileges anymore.”

Disney’s Reedy Creek Improvement District isn’t the only special district affected by the Florida bill.

Though they are outnumbered, Florida Democrats have spoken out in defense of Disney.

“The Disney corporation is being attacked for expressing support for its many LGBTQ employees and customers,” said state Sen. Tina Polsky, a Democrat from Florida’s 19th district. “Are we really making this enormous decision based on spite?”

As the bill to dissolve Reedy Creek has passed Florida’s Senate and House, it will now make its way to the desk inside the office of the Governor. Reportedly, if signed by Governor Ron DeSantis, the bill would become law, making way for the dissolution of Reedy Creek and other special districts in the state to take place in June 2023.