Disney Wars are Just Getting Started: Why Disney isn’t America’s Company Anymore, and What That Means for Republicans

At the end of November, conservatives and capitalists seemed to get a small victory in an unexpected place: Republicans felt vindicated and Disney’s shares rose on the news that Robert Iger, its CEO for fifteen years of soaring profits from 2005 to 2020, was coming back to lead it for at least another two. Kicked to the curb was CEO Bob Chapek, who had presided over a loss in revenue and antagonized conservatives over Governor Ron DeSantis’s sex education law in Florida public schools; in response, DeSantis signed legislation removing the company’s tax breaks and restricting its privileges in the Florida improvement district where Disney owns land.

Free-marketeers put Chapek’s fall at the feet of an economy which Democratic spending pumped up with easy money during COVID and which is now contracting as consumers spend less thanks to inflation. “The marketplace is a tough disciplinarian, in contrast to government,” was The Wall Street Journal’s line. Cultural conservatives blamed Chapek’s fall on his fumblings in Florida—“Go woke, go broke,” was the line on Twitter. National Review said, “Woke Strikes Back.”  

Meantime, Florida State Representative Randy Fine, who drafted the law taking away Disney’s special status in the state, said that “Chapek screwed up, but Bob Iger doesn’t have to own that screw up” and mentioned restoring the company’s privileges. Iger himself talked about compromise in a garbled way that gave no ground: at a Disney Town hall meeting, he said that

What I can say [is] the state of Florida has been important to us for a long time and we have been very important to the state of Florida. That is something I’m extremely mindful of and will articulate if I get the chance…Do I like the company being embroiled in ‘controversy’? Of course not. It can be distracting, and it can have a negative impact on the company. And to the extent that I can work to quiet things down, I’m going to do that.

A theme of this blog is that a large institution that wants to avoid “controversy” and “quiet things down” probably hasn’t changed its underlying agenda. From this perspective, there’s a third line for conservatives and Republicans to take on Chapek’s departure and Iger’s return: Disney under Iger won’t be meaningfully different than Disney under Chapek. Instead, the “defeat of wokeness” and the restoration of “market discipline” are fig leafs on a deeper story about politics and power. This story, of Disney’s evolution the past seventeen years and what it means for America, should concern capitalists, cultural conservatives, and anybody who cares about arbitrary authority and dominion.

It also points to a bigger challenge for Republicans: deciding whether the party’s future is with too-big-to-fail corporate conglomerates like Disney or with working people, the middle class, entrepreneurs and genuine free-marketers. Republicans have courted both groups since the 1860s when Abraham Lincoln’s government passed the Homestead Act to incentivize ordinary Americans to own and work property even as William Seward, Lincoln’s Secretary of State, opposed Reconstruction in favor of pushing corporations to open up China’s market. Walt Disney himself—the ultimate entrepreneur turned corporatist—was a Republican, and so was Ronald Reagan, a Hollywood actor who, with corporate backing, remade Republicans into the party of the common person. But now that dual identity of the Party is starting to split, and shift away from corporations. Disney’s recent history and probable future are examples of why.

Both Disney’s history and future flow from Iger, one of the most successful American corporate executives of the last two decades. In that time, Iger’s focus has been threefold: acquiring companies in a drive toward concentration; penetrating China’s market; and changing Disney’s content to keep up with changing media norms around gender and race. It’s these focuses that put him atop a current that, year by year, has been pushing corporate America away from the new Republican Party.

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The root driver of that push is the drive toward concentration, a fact of twenty-first century corporate life that is a also fact of Disney: in his first tenure alone, Iger’s major acquisitions included Pixar, Lucasfilm, Marvel,  21st Century Fox, and Hulu as part of Disney’s move into streaming. And this wasn’t all: as the Left magazine The American Prospect put it a few years ago, besides its major mergers,

Disney now owns or holds a share in…A&E, Endemol Shine (producers of everything from Deal or No Deal to Black Mirror), ESPN, Fox Sports Network, FX, GoPro, History Channel, Hollywood Records…Lifetime…National Geographic… Photobucket… Touchstone Pictures, and Vice Media. Disney owns…music producers, libraries, digital marketing companies, web streaming services, photography companies, video game studios, television and radio stations, magazines and book publishers…local news stations in eight major U.S. cities…

Iger’s moves were part of a broader business consolidation glut that started seriously in the Eighties and accelerated through the Nineties, urged on by national policy. The genesis of the trend was the Reagan Administration’s successful prosecution of an economic boom against the Soviets through encouraging low-cost consumer goods, efficiency and financial investing in firms by smaller shareholders. Its means were lowering the bar for antitrust prosecution—making the issue that could derail a merger not the size of the new company but whether a merger harmed consumers by raising prices—and deregulating the market. The Reagan economic revolution was successful: mergers and deregulation increased efficiency, lowered costs, boosted investments, and brought Americans into the market, outpacing the Soviets. Still, long-term, problems surfaced, especially as the Clinton, George W. Bush and Obama administrations continued loosening regulations and encouraging mergers. It turned out that, for all their benefits, sharp deregulation and low antitrust bars created not an upward arc but a vicious circle: they ended up causing the corporate inefficiencies and low dynamism rates that they’d been meant to stop.

These two causes built on each other. Fewer rules created more incentive to decrease costs and increase efficiency, creating more competition between firms and more drive towards a bottom line to satisfy shareholders. Less antitrust enforcement made more room for mergers, which promised to benefit shareholders and upped the pressure on firms to out-size each other. The consequences built on each other, too. By 2010, even economists who supported these policies worried about large corporations overspreading the market: cutting out competition through bigger mergers as well as through insider lobbying in Washington, D.C, where politicians depended on donations and worried about hurting companies with such influence over America’s economy. These trends had the effects of lowering market dynamism and even raising consumer prices: the opposite of what the Reagan Reforms accomplished at the beginning, which was helping the consumer and increasing investment in new businesses. They’re also what Tea Party Republicans have meant since 2009 when they talk about corporations being too- big-to-fail.

Disney embodies these trends.

As the Prospect showed, Disney dominates the media market:

At the moment, almost 38 percent of all U.S. box office sales in 2019 have gone to a Disney-owned movie, down from a peak of over 40 percent earlier this year. And that’s even before coming releases of Frozen 2, Maleficent: Mistress of Evil, and Star Wars: Rise of Skywalker….Disney has more than doubled its already significant market share [of the U.S. box office] in just five years, reaching an unprecedented point in modern history for a film company…

And Disney’s use of its concentrated power has hurt smaller businesses. From the same Prospect report:

Movie theaters themselves are struggling to stay afloat, and thus have to rely on big-budget blockbusters that are guaranteed to earn a return…[but] when Disney negotiated the rights to show Star Wars: The Last Jedi with movie theaters, it gave the theaters “a set of top-secret terms that numerous theater owners say are the most onerous they have ever seen,” including giving Disney “65% of ticket revenue from the film, a new high for a Hollywood studio,” and forcing them to “show the movie in their largest auditorium for at least four weeks.” Any violation of these conditions meant that Disney had the right to take away another 5 percent of the box office revenue from the theater. The combination of struggling theaters and consolidating studios means that companies like Disney can now bully theaters around before giving them access to show must-see films.

Disney’s concentration also hurts the consumer. From the Prospect, again:

Disney…went from producing an average of 24 films a year in the 1990s to producing 12 films a year in the 2010s…the lack of powerful competition means Disney simply doesn’t have to make as many films…The Disney of today would likely have never approved the making of lesser-known fan favorites like Air Bud, James and the Giant Peach, Ed Wood, or O Brother, Where Art Thou?, nor would they have agreed to distribute Japanese masterpieces like Howl’s Moving Castle or Spirited Away in America.

Finally, to protect itself, Disney has a powerful lobbying arm to expand its position and keep smaller competitors out: it has 38 lobbyists in Florida, and it spends the fifth most of any entertainment lobby in Washington, D.C., while the National Association of Broadcasters, to which it belongs, spends the most. Iger, too, is politically connected: he was a Democrat until 2016 when he switched to Independent but supported Hillary Clinton’s presidential campaign and has donated to a range of Democrats. He also felt confident enough of his place in the Democratic Party to publicly consider running for President as a Democrat against President Trump in 2020.

But with a media firm like Disney, there’s another, bigger, more frightening problem than even corporate expansion and its affect on small firms, or the lobbying and insider baseball. Suddenly, a too-big-to-fail firm is controlling a plurality of the ideas that Americans see; one corporation is producing Star Wars, America’s superhero movies and movies for young adults and children, which means an enormous amount of centralized control over content that goes out to America’s most impressionable demographics. Meantime, Disney’s content creators are working in an increasingly bottom-line market; in response, within the company, centralization of content creation is becoming the new normal. For example, a Chapek initiative that rankled Disney executives but whose cost-cutting spirit Iger appears to support involved taking away some spending authority over films from their creative heads to cut costs. Not surprisingly, this initiative came from McKinsey, one of the consulting firms whose numbers have skyrocketed since deregulation and mergers made efficiency and cost-cutting the watchwords of the 1990s.

So the question is, who are these more powerful CEOs in more centralized corporations answerable to when it comes to content they’re producing? Looking at Iger’s history as CEO, the two answers aren’t encouraging, and they build on each other: China and Woke activists.

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Iger’s Disney is in hoc to China because it’s the most lucrative foreign market, which is where expanding conglomerates under more pressure to deliver to shareholders and finance their higher operating costs turn for profits.  In fact, China is the heart and soul of the Iger era. “Disney’s Robert Iger is Game for a New Job: U.S. Ambassador to China,” went a Wall Street Journal headline of December 2020, adding that he has “a long-running relationship with China’s president Xi Jingping”:  

Mr. Iger’s history in China dates back to the 1990s [when he was CEO of ABC, which Disney acquired in an early merger]…on a trip during which the company apologized for releasing a movie sympathetic to the Dalai Lama [the leader of the Tibetan independence movement], Martin Scorsese’s “Kundun.” Mr. Iger has since gotten to know Mr. Xi, at one point presenting him with a photo of Mr. Xi’s father visiting Disneyland in 1980. After being named CEO in 2005, Mr. Iger picked up a yearslong campaign at Disney to break into China, which has resulted in a Disney theme park in Shanghai and billions of dollars in box-office grosses flowing back to the company.

For a small example of how Iger’s approach to China affects content, consider a Hollywood Reporter interview with Richard Gere. Gere was Disney’s one-time favorite leading man for his role with Julia Roberts in 1989’s Pretty Woman, which the studio produced, but he hasn’t made a major studio movie since 2008. “There are definitely movies that I can’t be in because the Chinese will say, ‘Not with him,’” Gere said. “I recently had an episode where someone said they could not finance a film with me because it would upset the Chinese.”

But there are even more concerning questions about Disney when it comes to China and content. Why do prominent villains in the Marvel Universe, as in much of Hollywood, come from Russia and not from China? Why did Disney produce two blockbusters aimed specifically at China in 2020 and 2021 that included a thank you in the credits to associations affiliated with the Chinese Communist Party, not taking the hint that even these gestures aren’t enough for the Chinese government? (Both films, one a live-action Mulan popular in America and the other the first Marvel movie to feature a Chinese superhero, were prohibited in China by Chinese censors because Mulan’s lead criticized China’s government and the Marvel movie’s lead commented that China was a country where people die of starvation.) The answer, of course, is money: the same Wall Street Journal article that reported on Chinese censorship mentioned the fact that China “went from being largely shut off to Western entertainment in the 1990s to the industry’s most important international market.” And, thanks to this answer, the new reality is that America’s most powerful content producer is making content which Americans are seeing that’s being screened to appease America’s main geopolitical rival. 

But if you asked a Disney supporter, this might not be the way he or she would frame the issue. Most likely, he or she would justify the push to engage China as a push for diversity, equity and inclusion—a new frontier in the project of Wokeness, which after promoting concentration and penetrating China is the third of Iger’s projects at Disney.

Iger’s Disney is in hoc to and allied with Woke activists for two reasons. First, the bigger and more bottom-line a company gets, the more it depends on shareholders, which means that disruptions by small groups can have outsized influence on CEOs because of worries over their effect on share price. It wasn’t a coincidence that as mergers skyrocketed in the 2010s, small groups of activists started to use racial and gender issues to bully executives haunted by the thought that controversy would hurt their firms earnings. Better to play it safe and threaten nobody’s bottom line: satisfy the activists with quietly woke content, keep the shareholders happy and bet that the average consumer won’t yank her son or daughter off a ride or out of a movie because a theme or two doesn’t sit right. Second, this is an even easier choice for executives to make if activists’ logic helps the corporation justify actions it would take anyway: say, expanding into a market like China not just in the name of profit but also of racial and ethnic diversity.

Thanks to his stumbles in Florida, where he managed to offend both employees by dismissing their protests against the law and then Disney by reversing course, the not-so-nimble Chapek became wokeness’s face at Disney. But wokeness started earlier, and subtler, under Iger. Bit by bit over Iger’s fifteen years, Disney stopped encouraging individuality or even supporting diversity. Instead it started pushing a social ideology from the top down: "I told him I had never seen Disney, or a Disney chief executive, so deep in the political mix,” a New York Times reporter said when he interviewed Iger in 2017, toward the end of this period. But Disney’s shift was quiet enough—a not-directly-connected series of tweaks and suggestions and responses and decisions—that it was hard to target.

Some of it came through in remakes of Nineties’ classics in the late part of the 2010s. The Lion King was voiced by a predominantly black cast, for which the director was praised, ignoring the fact that race is a complicated category in the first place: does a Congolese person necessarily identify with a Black American living in Missouri? (It also ignores genuine questions the acting community is confronting about whether and when someone’s race, sexuality, etc. should determine their casting.) Meantime, Beauty and the Beast’s one-note portrait of small town citizens in the era of Trump—as not just disapproving and angry but racist, misogynistic and worshipful of strength—was nothing if not political. There were exceptions to this trend (see this endnote[i]). But they didn’t affect the bigger push or the bigger question: what does it mean when movie after movie tells young people that small towns are backward and authenticity can be reduced to race?

Some of it came through in the theme parks. Disney made changes to rides like Splash Mountain and Pirates of the Caribbean, removing what it considered offensive portrayals of other cultures, but also changed its policies to allow employees to wear tattoos and removed “gendered greetings” from theme parks. These last shifts surely offended some traditional-minded Americans who didn’t get a voice in the process, or simply people who felt lectured by a giant corporation they’d come to for entertainment. But when these Americans did decide to voice their concerns, the response could have been a parody of social censorship: a self-identified “Christian conservative” wrote an opinion piece in the Orlando Sentinel titled “I love Disney World, but Wokeness is ruining the experience,” and received mass Twitter condemnation by actors and directors with multiple Disney Credits (and at least one Oscar) to their names. Whatever you think of the piece or its opinions, the outsized response leads to questions of actual equity. What does it mean about a company’s values when a consumer writes an op-ed and is subjected to a corporate pile-on, whereas when a small number of employees threaten a walk-out over the company’s refusal to condemn a Florida law, the company caves? Is this the consumer-friendly capitalism that deregulation and loosened antitrust law promised? It also leads to questions about how the company will use cultural censorship in the future. Will protests against Disney’s moves in China be greeted, as concerns over China’s role in COVID-19’s spread were, with allegations of racism leveled by Iger and members of the Democratic Party, to which Iger is a donor? And who, given the climate of dull, hammering, vicious, inevitable condemnation, won’t be afraid to protest in the first place?

Some of it came through in personnel choices: most obviously, Iger being “personally involved” in a decision not to discipline ESPN’s Jemele Hill after she violated company policies in 2017 by tweeting that President Trump was a white supremacist. Iger said he “felt that recent political events outweighed the company’s social media strictures” and that he had “empathy” with Hill. But this “empathy” has to be put next to his decision not to intervene in the case of Rachel Nichols: ESPN’s pathbreaking journalist who was illegally taped in a private conversation suggesting that airtime was being taken away from her and given to a Black colleague because of the company’s “crappy record on diversity—which, by the way, I know personally from the female side of it.” She was eventually let go by the network after the tape was anonymously leaked inside the company and then to The New York Times. What kind of message do these two decisions send employees, and aspiring employees, in corporate America? That illegality is okay as long as the “wrong” uncovered is deemed “wrong” by the people in charge? That violating company policy is fine so long as “political events” warrant it? That punishments and rewards are now completely arbitrary in the C-suite, or dictated by an ideological code determined by obscure interests and subject to constant revision?

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If these are the interests newly powerful executives like Iger are answerable to, then a company like Disney— despite its history, despite its branding, despite its cultural power, despite its tax breaks—is not America’s company at all. Instead it’s a multinational corporate behemoth whose consultants are urging executives to centralize control over products that shape young minds. These executives, in turn, are creating content off the converging interests of two hostile actors: a foreign economy which has been weaponized by its government and radical activists pushing cultural dogma. Wokeness is the problem at the top of this pyramid because it touches Americans’ immediate lives. But beneath wokeness is China’s marketing, which shows up in the smallest and most insidious of ways: it’s not encouraging that one of the Disney-employed actors attacking the conservative Christian op-ed writer used his tweet to direct followers to the Chinese media giant Tiktok. Finally, beneath China are the pressures toward corporate concentration that give small numbers of executives like Iger outsized control over content in the first place.

Where does this leave Republicans? How does the party opposed to arbitrary power solve a problem like Disney—not to mention the broader problems that Disney represents in corporate America?

First, Florida state legislators should keep their restrictions on Disney in place, an idea with which Governor DeSantis seems to agree. In response to Randy Fine’s suggestions of restoring Disney’s privileges, the Governor’s office released a statement that put him squarely on the side of small businesses and taxpayers against Disney:

Governor DeSantis does not make ‘U-turns.’ The governor was right to champion removing the extraordinary benefit given to one company…We will have an even playing field for businesses in Florida…Disney’s debts will not fall on the taxpayers of Florida.

Florida Republicans should then use this leverage to push the company to account for its woke, pro-China policies and content: if, as Governor DeSantis recently said, the dictums of Davos have no place in Florida, than neither do the social and cultural lines Disney is pushing. Incoming House Republicans should take this line, too, following the lead of top Republicans on the House Oversight and Reform Committee who demanded accountability over Disney’s collaboration with Chinese Communist affiliated groups during the Mulan shoot.

At the same time, both Florida Republicans and the Republican Party should use the national government to target the root cause of Disney’s problems: concentration. This means keeping the Republicans’ founding identity as the party of regular people, entrepreneurs and small businesses but moving away from corporatism. The advantage to this move is that Republicans can make a play for interest groups and tactics that Democrats have claimed since the 1830s and 1910s. Here are two examples of how.

a.       Supporting private sector labor unions as hedges against corporate concentration. One of the interesting things about the push for unionization is how ardently companies like Starbucks and Amazon, which are more than happy to let their employees sport tattoos in the name of free expression, don’t want them expressing themselves politically inside the company. Trouble could be on the way for Disney with unionized workers, too: the new website Florida Politics featured a grim report in August about living conditions for unionized Disney employees in the run-up to the first negotiations with the company since 2018. Walt Disney’s own great-niece, the granddaughter of Disney’s cofounder Roy, has made an entire documentary about Disney’s working conditions. And even Forbes, whose audience probably doesn’t include too many trade unionists, has reported on the issue.

Is there a political advantage to Florida Republicans, who also have local issues to attend to, in taking a stand here? For national Republicans, there certainly may be: since President Biden and Democrats effectively railroaded railway workers in their negotiations for 7 days of sick leave, the Democrats have handed Republicans an opportunity to make good on their rhetoric of being the party of the working class. Senators like Florida’s Marco Rubio took this opportunity in the railway vote, siding with the workers, along with Texas’s Ted Cruz, Missouri’s Josh Hawley, Louisiana’s John Kennedy, Indiana’s Mike Braun and South Carolina’s Lindsey Graham. As The Hill put it, “there appears to be growing conviction among ambitious Senate Republicans with an eye on higher office that appealing more broadly to working-class voters is a recipe for future success.”  

They might be right about the political advantage. As with railway unions, the Democratic Party is awkwardly straddling the line between large private corporations and their workers. In a recent example, President Biden both supported Amazon employees’ unionization efforts in New York after they succeeded and awarded Amazon, which used surveillance tactics to try to shut down the unionizing effort, a $10 billion Pentagon contract—breaking his pledge not to give national government contracts to union busters. Forcing Democrats to pick a side between Disney and its unions could put them in a tight spot.

b.       Supporting antitrust lawsuits to stop corporate mergers, keep corporations accountable to consumers and rein in too-big-to-fail conglomerates with influence on government. The CEO of Amazon recently said, at the annual Dealbook Conference, that the company was making fewer acquisitions because of beefed up antitrust enforcement by the head of the FTC, President Biden’s appointee Lina Khan. This is the kind of thing that Republicans should be happy to hear. It’s also something to keep in mind when it comes to Disney: the last thing America needs is for the company to take over more studios, bully more theaters, centralize more content and push it onto American children and adolescents.

Pushing this line may have a political advantage, too: pitting Democrats’ antitrust priorities against their corporate priorities in uncomfortable ways. Making Democrats choose between their C-suite allies and the more progressive backers of Khan will either cause them to alienate one group, or else it will push the Democrats back on what’s become their normal tactic, which is muddling through with garbled talk of compromise. In contrast, Republicans can stand firmly and clearly against arbitrary power and for the consumer and small businessperson.

Meantime, small but savvy Republican organizations like the American Civil Rights Project are already proposing breaking up three large investment firms, alleging that they use their power on the market to push away from oil-and-natural-gas at the expense of shareholders. 19 states attorneys general have  come together to propose looking into collusion between these investment firms. Can this model be proposed for Disney? Or can a breakup be attempted under revitalized antitrust standards that restore the old antitrust idea: bigness in and of itself is corrupting? Again, it’s borrowing an idea on the Left, but if Ted Cruz and Bernie Sanders can come together to support railway workers, stranger things have happened.

What would it mean for Republicans to take on Disney? It would mean addressing two of their voters’ most immediate concerns, wokeness and China, and digging into their root cause that Republican voters also hate: corporate conglomerates that are too big to fail. Disney is truly special—America’s most prolific content creator of blockbusters for America’s most impressionable cohort, its CEO a prominent Democrat with ties to China and a woke agenda—and that makes it a bellwether for broader trends. It isn’t the only corporate conglomerate over-investing in China, or catering to Chinese politics, or adopting a social doctrine that justifies its actions in the name of righteousness. But, because of its bellwether status and the list of Republican concerns the company raises, and because of its extraordinary influence on young Americans, starting with Disney makes a lot of sense.

[i] One example of a film where a focus on changing gender norms ends up bringing out characters’ individuality is the live-action Aladdin. There, Princess Jasmine, far from being a cipher, the “prize” Aladdin “wins,” is a young heir to the throne determined to shoulder the responsibilities of rulership in the face of fierce resistance. Aladdin, meantime, is her link to real life on the streets of her country: the wild card brimming with ideas and information and spontaneity. It’s a gender reversal of Pretty Woman, or of Justinian and Theodora, that breaks up old categories and lets people be themselves.