Disney’s Latest Public Relations Stray Voltage: EA Merger & RCID
Just a couple for today. Some things that made the headlines, or to be more exact Disney put in the headlines.
First up, rumors are suddenly flying around that Disney wants to buy Electronic Arts.
Darklings: What? Seriously? Disney can barely keep the lights on as it is.
Which would be a good reason to buy something expensive. I know it’s counterintuitive because when you and I buy something expensive, we have to pay money for it and we no longer have that money.
A corporation does not have to pay actual money for something. There’s usually some cash involved but a lot more of it is stock and loans by either adventurous investors or retarded bankers. It’s a package deal.
Another advantage for Disney is that once you’ve purchased another company, it is a routine matter to shut down various things that aren’t making money and are completely useless OR shut down things that are making money and are valuably useful. Either way, they get to take the tax write-down. Lots and lots of tax write-downs. There is plenty of reorganization that goes on at these times as well. A vast number of objects are being placed under cups and being shuffled skillfully around. A merger enables the concealment of a multitude of financial sins.
Darklings: You always say, “Malinvestment always liquidates in the end.” How does this stop that?
It doesn’t. Which is why you immediately turn around and make another major acquisition. Any company that does this a lot tends to creep the hell out of financial analysts. Even when they aren’t trying to hide something it’s just as easy to accidentally lose something when a deal this big is going on.
Although, it is rarely an accident.
So trying to buy something like EA which has a market cap of about $40 billion and a stock price that currently leaves Disney in the dust makes a certain amount of sense.
Then there is Bob Iger. Acquisitions are his primary skill set. Shepherding through mega-deals is his default state. It’s his bread and butter.
Also, he came up through sports news. It’s his first love. When he was at ABC he kept ESPN under his wing and that paid off bigly. If you are buying EA, you aren’t doing it to make a new Wing Commander or revive Command & Conquer, you especially aren’t doing it to build a good and original game. You buying EA for Madden and FIFA.
So there are some reasons that make it plausible.
Darklings: Fine, EA probably deserves to have Bob Iger as its CEO.
True. But what makes it improbable is just how shitty Disney has always been with video games. Disney’s highly regimented, Mickey Mouse tie-wearing corporate culture can’t work within the world of video game development. While I hated Disney for shutting down Lucas Arts, ultimately they were right to do so because they KNEW they were going to fuck it up eventually so they were better off taking the write-down while they could, (you only have a limited time window to take write-downs after a merger).
What makes buying EA impossible is Disney groaning under the weight of its Hulu purchase. They have no choice about that one.
Cancer Rat is straining to put together an $11 billion dollar buyout. A $40 billion purchase isn’t going to happen. Admittedly, it’s a little easier since Nelson Peltz announced he was raiding the company. Disney’s stock price went up at the news that there might just be a hope of somebody taking charge who has a plan.
And that is the reason this stray voltage got put out in the wild, Bob Iger would prefer people to be talking about him potentially making a major acquisition than Nelson Peltz getting control of the Disney BOD.
Here’s the second stray voltage.
Ron DeSantis has given Universal something he has taken away from Disney, namely a special taxation district.
Darklings: Wait, a minute. Woah. Disney has one.
True, but stupid people don’t know that. And those on the left that do know it, would prefer to lie about it.
When a new high-speed train line was announced to be going into Orlando from Miami there was a decision to expand it into a commuter line at the Orlando railhead. Steamboat Wendigo was asked if he would like train tracks going out to Disney World. Naturally, he said, yes. When asked if he would pay for it. He said, fuck you, you need me more than I need you. You build out to Disney World out of your own pocket.
Universal said, we will happily cough up a couple of hundred million for this project but in exchange, we want the special taxation district we’ve been begging you for, for the last twenty years. The answer from the Florida powers that be was, you’ve got a deal.
Disney had plenty of time to complain during the required public forums. They didn’t say anything, although I suspect that was largely because Mickey the Great and Terrible has to stay on Universal’s good side until the Hulu deal is finished.
Now that Universal has its special tax district Twitter bots are suddenly going on and on about how DeSantis is playing favorites by giving Universal a special tax district after he stripped Disney of theirs. Disney World had their ludicrous company town district replaced by a special district that meets Florida’s current standard. Hell, they still have a bullshit residential district because if Florida dissolves those trailer parks municipality, then the entire state’s muni-bond rating will be cut by about half. Universal’s is a non-residential district, meaning that Disney still has a ton of special privileges Universal doesn’t have, it is just that Cancer Rat wants more.
It’s not getting those privileges back. Disney knows it can’t win the lawsuit. This is entirely about public relations. It’s just more stray voltage to keep regular people from taking too close a look at how Disney has done business in Florida for sixty years.
Okay, I’m done here.
