The Walt Disney Company's Spending on Theme Parks and Cruises: A Profitable Investment or Socially Positive Venture?

Recently, The Walt Disney Company announced a significant investment of $24 billion in its theme parks and cruise lines over the next five years. As a fan of Disney or not, does this expenditure represent a socially positive use of the company's funds?

Is Socially Positive Spending a Necessary Consideration?

My primary focus when investing in Disney, like many shareholders, is to maintain a high stock value and ensure a steady stream of dividends. The profitability of spending $24 billion is the key factor. If the public disagrees with how Disney allocates its earnings, they have the right choice: avoid purchasing Disney products or visiting their parks. They can redirect their intended spending on Disney tickets, cruises, or other Disney-related items to something they deem more socially positive. However, the ultimate decision on how to use the company's resources lies with Disney, not its shareholders or customers.

Spending Flexibility of a Large Corporation

It's important to recognize that while many people may criticize how Disney uses its money, corporations have the right to use their funds as they see fit. Disney could, for instance, have a lavish party on a private island for the next six years and their shareholders might not be pleased, but as long as the company does not engage in illegal activities, there's no issue. The decision is a matter of freedom of choice for the corporation, rather than an obligation to adhere to public opinion.

Social Positive Implications

Some argue that spending $24 billion on theme parks and cruises is merely a reflection of the joy that Disney brings to millions of people. The company would argue that building more parks is fair, given that they generated this substantial sum by providing people with joy. However, the added value in terms of revenue over the long term is seen by many as speculative.

Moreover, maintaining and expanding its operations supports the employment of 201,000 employees, which could be considered a socially positive aspect. Throughout fiscal year 2017, Disney donated $348.6 million, equivalent to $1.743 trillion over five years. However, how a company spends its revenue is ultimately its business, not that of its customers or shareholders. Therefore, if you find their spending choices concerning, consider not purchasing their products or services. This is a straightforward and informed approach to addressing any disapproval of their actions.

Conclusion

The question of whether the $24 billion investment is a socially positive use of Disney's funds is subjective and depends on individual values and perspectives. For shareholders, the focus should be on the profitability and long-term growth potential of such an investment. For consumers, this is a matter of personal choice and what they consider to be a socially positive use of their own money.