The Red Button Option

[lazyboy97o]

WDW PRO is suggesting nothing. Want to go after someone, come after me.

Point is $800MM was transferred, appearance and timing raises questions.

$800 million was not transferred. It is the total paid by the owners, making Disney’s share less than $400 million.

 

[HongKongFooy]

The Red Button Option

Outstanding headline!

........I fully appreciate the double entendre/word smithing

 

[Nubs70]

$800 million was not transferred. It is the total paid by the owners, making Disney’s share less than $400 million.

Government officials on the payroll is a signicant problem.

 

[lazyboy97o]

Government officials on the payroll is a signicant problem.

The Resort is majority owned by the government. Party membership does not make one a government official.

 

[Disstevefan1]

I am likely to be announcing the biggest news/rumors I will ever make in this thread (at least, I hope so). As a preface to this information, please remember that this information should be treated as RUMOR. I cannot verify that any of the following information is true in part or in whole. You should not make any business decisions based on the information provided herein. While this information has some details of a political nature, its required to even post what is going on... please do not discuss the political aspects of this news in this thread.

The last 24 hours has been eventful for Disney. While COVID cases in Florida are problematic to follow, Disney has been using the death rate to best gauge public safety. Within the past 24 hours, those numbers have reached levels that put staying open for the Walt Disney World Resort in meaningful jeopardy. Closing WDW is immensely painful for the company, and Josh D'Amaro's main job at this point is to keep the resort running... but there could be a situation in which the resort simply can't remain active to guests. At this point, it appears increasing deaths in Florida are due to - and increasing due to - nursing home infiltration. Should that change, Disney could conceivably close the resort OR resort back to the Secure Circuit plan that would involve closing everything except Magic Kingdom and the MK resorts. A push in that direction comes from the concern that even with their most restrictive capacity ceilings in place, some parks simply can't generate enough demand to warrant staying open (except for the purpose of demonstrating that they can be open for stockholders).

To add further to the company's woes, in the past 24 hours there was a major breach of security at Twitter. While the news media is mostly focusing on a bitcoin scheme that was part of the Twitter hack, Disney (and other companies) are much more concerned about the seemingly true issue that hackers had access to all Direct Messages on the platform for verified accounts. I am told that a small minority of individuals within the company AND linked to the company through various current and former projects may have had information within those Direct Messages that would be damaging. Disney Legal has advised individuals who may have had damaging information in their Direct Messages to delete their Twitter accounts, and at least one individual of significant stature has elected to do so. There is real fear in Burbank that hackers have information about the company, about individuals within the company, etc, which would be particularly unpleasant to have released into the public sphere.

But it still gets worse... also within the past 24 hours, the Trump administration has dropped the hammer on the Walt Disney Company. First, there was an executive order in regards to Hong Kong which can absolutely affect Disney employees and Disney company plans. Attorneys for the company are currently reading through the executive order and seeking guidance from the Trump administration as to how the company can avoid seizure of property due to potentially aiding in the harming of Hong Kong citizens' democratic rights via indirect means. Because of the broad and non-specific language in the executive order, Hong Kong Disney may stay closed indefinitely, regardless of the COVID situation there. Furthermore, in a speech on July 16th, Attorney General Barr made headlines with a speech in which he disclosed the number of Chinese Communist Party officials working in Shanghai Disney management, including the number who have communist insignia on their desks. This sent a ripple through the Disney Company as they realized that US Intelligence has inside information about their Shanghai operations, and are confident enough to release that information. This puts the company in an exceedingly difficult place: stray from China's demands and everything can be taken like in the NBA situation... act in China's interests and the United States Justice Department may now come calling.

Numbers inside the company now project that cash reserves could hit as low as 6 billion by the end of September, with the possibility of this pandemic situation going into mid 2021. This is an unsustainable path. With all of the previously disclosed information provided, I can now provide insight as to what is driving a wedge between Chapek and Iger. Whereas Iger is interested in his legacy and protecting it at all costs, Chapek is a numbers guy. And Chapek is proving to be formidable in protecting himself from being the scapegoat he might have been if he had allowed it. Against the wishes of Iger, a plan is being developed inside the halls that Eisner built which would allow for Disney to sell and divest its interests in the Shanghai and Hong Kong resorts in a preemptive move to avoid losing them outright due to a possible cold war between the US and China. It is the Red Button Option. In that situation, Disney would use the sale of Shanghai and Hong Kong rights, while maintaining a licensing agreement for IP a la the OLC situation, in order to generate extra cash for a possible extended COVID world where Disney continues to be deprived of revenue streams. At this point the Red Button Option is still in its infancy as a strategy in conceptualization, but it can quickly be moved into actionable state if situations continue to deteriorate. Going forward with the Red Button Option is fraught with difficulty... not the least of which being that Iger might resign in protest.

As for Splash Mountain and other frivolous projects, the pendulum has begun to shift inside the company. More information to come at a later date. Power seems to be shifting from certain factions towards an "all hands on deck, save the financials" mode. It's about time.

I would say the CCP dropped the hammer on Hong Kong, but that's just me. I see nothing wrong with Disney selling its interests in Shanghai and Hong Kong and maintaining a licensing agreement, its fine!

Splash Mountain is just what it is, my only concern is I don't want to see this attraction closed for two years to open with one animatronic and a bunch of projection screens.

 

[mgf]

Supposedly Chapek wanted to open MK and MK resorts only. It would have been by far the safest gamble but Iger pushed for all 4 parks.

"Supposedly" according this OP. There is no independent confirmation of any of this. It is just rumor.

 

[el_super]

Government officials on the payroll is a signicant problem.

Wait.... is this what they're being accused of? Paying off government officials?

How is it really any different from the millions they've spent on US elections and campaigns?

 

[monothingie]

The Red Button Option

Outstanding headline!

........I fully appreciate the double entendre/word smithing

About as subtle as an atomic bomb.

 

[mgf]

None of this makes sense for a tested, seasoned multi-national company. This is the third or fourth thread claiming that Disney is flailing in panic and has zero capability for forecasting, scenario mapping, and disciplined decision making. This narrative simply does not make sense. If it were true, Wall St would be going nuts, and Iger would be out.

This is all pot stirring. I am sure someone is feeding out these ideas/theories/rumors, but a couple things stand out:

1) No company is going to make rash decisions about the geopolitical landscape less than four months before an election -- REGARDLESS of if they think the current admin will remain. Second terms look fundamentally different than first terms. Always. They might be making some motions to hedge and to hide from the spotlight, but they are not going to bend to ANY administration in the back half of the last year of a term. This is not a political statement. This is about strategy.

2) I cannot imagine ANYONE thinking that Chapek has more juice than Iger. The idea of a faction aligning behind Chapek is nuts to me. I guess they are all volunteers to go down with the ship? Iger's legacy is cemented. His return to "right" the company will not be viewed negatively because COVID is a truly black-swan event. Black-swans make heroes but rarely turn folks into villains. Chapek will likely be paid handsomely to see his way out within the next year or two. He probably knew this going in.

 

[Nubs70]

Wait.... is this what they're being accused of? Paying off government officials?

How is it really any different from the millions they've spent on US elections and campaigns?

With government officials on payroll the opportunity definitely exists.

US lobbyists are different from foreign governments. Lobbyist influence the development of law not exercise of duties.

If an agent of the company, direct or indirect, offers direct payment or any item or action of monetary value as consideration for an action by a governmental or quasi governmental entity, that is a violation of the US Foreign Corrupt Practices Act.

For example, offering something to expedite the permit process is a violation.

My company willfully does not operate in countries where facilitation payments are commonplace.

 

[doctornick]

Government officials on the payroll is a signicant problem.

I'm not sure what this means exactly. Are you suggesting that government officials in China are being bribed, as has been not-so subtlety implied but in no way proven in regards to the oft mentioned $800M. That could certainly be an issue, though it seems that bribing is somewhat of a "how things get done" in China and could possibly implicate most any company that has significant interests there. And AFAIK has never been proven in regards to Disney, though it hasn't stopped people from implying it repeatedly.

If you are saying that CCP members working for Shanghai Disneyland is a problem... um, I don't get it. The resort is majority owned by Shanghai Shendi Group which is a government owned organization. Of course there are government officials working at SDL - they partially own the darn thing! And I would think many government workers are members of the CCP, as that's probably how they got such nice cushy jobs. So, bringing up desks with CCP insignias just seems to be an odd point. Why wouldn't there be such desks at their offices?

 

[GrumpyFan]

Since when have such official people with important business used Twitter direct messages to communicate? I’m not saying I don’t believe you, but this seems incredibly random.

Most major corporations have strict IT policies against the use of any social media platforms for business purposes. I would be highly surprised if Disney didn't prohibit such activity and if there were many that were compromised in this manner. If so, they are subject to disciplinary action including termination.

 

[GrumpyFan]

Most major corporations have strict IT policies against the use of any social media platforms for business purposes. I would be highly surprised if Disney didn't prohibit such activity and if there were many that were compromised in this manner. If so, they are subject to disciplinary action including termination.

A Google search turned up the following from a Disney employee policy manual from 2016.

RESPONSIBILITIES WHEN USING OTHER SOCIAL MEDIA
1. Employees’ online activities conducted on non-Company platforms,
but which relate to the Company’s business interests, also are subject
to Company policies, including this Employee Policy Manual and the
Standards of Business Conduct.
2. Employees should never disclose confidential or proprietary information
such as Company financial information, business performance, business
plans, prospects or other information that it is in the Company’s interests to
keep confidential. For example, employees should not:
• Tweet about a new theme park ride before it is announced to the public;
• Post photographs that reveal secret casting information;
• Blog about a potential merger or partnership; or
• Post Company earnings information that has not been made public.
3. Employees should not use their work email address when posting online
their personal opinions that are not related to work.
4. Employees may not use usernames for personal social media accounts that
imply they are speaking on behalf of the Company.
5. Employees must follow the Corporate Identity policy, including not infringing
on the Company’s or a third party’s intellectual property rights.
6. In online discussions related to the Company, employees should make
clear they are not speaking for the Company (unless they are specifically
authorized to speak on behalf of the Company on the particular topic).

Source: https://cepfranco.files.wordpress.com/2016/04/employee-policy-manual-02-2016.pdf

They don't specifically ban use of social media, but they do provide strict policies for what can be posted.

 

[lazyboy97o]

Most major corporations have strict IT policies against the use of any social media platforms for business purposes. I would be highly surprised if Disney didn't prohibit such activity and if there were many that were compromised in this manner. If so, they are subject to disciplinary action including termination.

Concern would not necessarily be about official business but just a variety of comments that could be considered to be in poor taste.

 

[Nubs70]

I'm not sure what this means exactly. Are you suggesting that government officials in China are being bribed, as has been not-so subtlety implied but in no way proven in regards to the oft mentioned $800M. That could certainly be an issue, though it seems that bribing is somewhat of a "how things get done" in China and could possibly implicate most any company that has significant interests there. And AFAIK has never been proven in regards to Disney, though it hasn't stopped people from implying it repeatedly.

If you are saying that CCP members working for Shanghai Disneyland is a problem... um, I don't get it. The resort is majority owned by Shanghai Shendi Group which is a government owned organization. Of course there are government officials working at SDL - they partially own the darn thing! And I would think many government works are members of the CCP, as that's probably how they got such nice cushy jobs. So, bringing up desks with CCP insignias just seems to be an odd point. Why wouldn't there be?

Even though "Thats how things get done in China", does not absolve $DIS or any other multinational from obligations under FCPA.

Things may be just fine but appearance of impropriety can be enough to trigger an FCPA investigation.

 

[Sir_Cliff]

The building of resorts in China always seemed both logical and risky given the size of the market and the likelihood of tensions between China and the US in the medium to long term. They may be surprised about how soon after Shanghai Disneyland's opening that things escalated, however, and that it's the US government rather than the Chinese governmentrattling its sabre in the direction of the resort.

Another thing that strikes me here is the way in which major US companies such as Disney and Apple are being targeted in the rising tensions between the United States and China... but by the US government. It seems unlikely to me that the US government would want to inflict major damage on such important companies to hobble China, but who knows. Disney is certainly going through a horror period of bad publicity, with WDW becoming the face of Covid-19 in Florida in the international media and now SDL becoming a symbol held up by the US government of companies kowtowing to the Chinese Communist Party.

Interesting times!

 

[el_super]

With government officials on payroll the opportunity definitely exists.

Yes, the opportunity exists in China. It also exists here in the US. That of course does not mean that it's actually occurring in either place. If the only real "evidence" of this supposed bribery scandal is a personal belief that "China is more corrupt," then that's not really evidence is it?

Wake me up when there's something actually worth reporting on.

 

[Ldno]

I mean no one unpredecented China trying to take over Hong Kong by force now, US companies are of course panicking at this point because they know they lost this battle and are shifting their focus to India, Apple included, China’s a lost cause when it comes to pandering and trying to get their big bucks, might as well write off Mulan to Disney + since it’s pretty bad over there, Can’t honestly feel bad for companies who’s bottom line is kowtowing to the Chinese communist party though, once we start banning Chinese made goods and apps heck it’s all downhill, just imagine everything imported from china, I WOULD KNOW because I bought something from Hong Kong that’s been stuck in customs since the middle of June, Inbound in customs since June 16th. Everything made in china is stuck in customs hell... just imagine how companies must feel trying to stock on merch made overseas to the US, Disney included...

 

[jt04]

Why is Chinese Disney in trouble if Iger is such a good deal maker?

What is happening geopolitically is way bigger than Iger and the mouse and couldn't have been forseen by any of the companies doing business there.
And the sky isn't falling.

They could "what if?" themselves into complete paralysis but they won't . IMO.

 

[Nubs70]

Yes, the opportunity exists in China. It also exists here in the US. That of course does not mean that it's actually occurring in either place. If the only real "evidence" of this supposed bribery scandal is a personal belief that "China is more corrupt," then that's not really evidence is it?

Wake me up when there's something actually worth reporting on.

Will do