Phil Robertson, Advertisers, And Disney Shareholders

If you have been following the news for the past day or so, you have likely seen the lead story and many debates about the comments that Phil Robertson of Duck Dynasty fame made to GQ Magazine that resulted in his suspension from the A&E series. Since then, news outlets have been abuzz about A&E’s wisdom in suspending Robertson. Those in favor of his suspension generally point out that America’s 1st Amendment guarantee of free speech only protects you from government interference regarding political speech (and does not prevent employers from exercising their rights to discipline employees), whereas those defending Robertson have been quick to lament the knee-jerk reaction to those expressing counter-progressive cultural beliefs in a very clumsy fashion, and claim there is a double standard in which politically unpopular conservative viewpoints are quicker to result in job terminations than politically unpopular liberal viewpoints that are also clumsily expressed.

As someone who spends a lot of time thinking about investing, I’m more prone to consider the economic side of these “culture war” issues rather than purely the political side.

And the one thing I have observed through this whole ordeal is the changing political viewpoint of Disney’s corporate politics. A&E’s Duck Dynasty is a brand that generates into the hundreds of millions of profits for Disney shareholders, and given the money at stake, it is unlikely that A&E executives made any decision without consulting the executives at Disney headquarters.

As someone who has studied Disney’s history, I find it interesting to observe the soft changes in corporate policy, as Disney has gone from being a socially lagging company to a company that takes more of the forefront on social issues.

In Walt Disney’s day, the company was extremely slow to embrace the civil rights movement. Walt Disney himself was culturally conservative when it came to operating his growing Disney empire, and you could see evidence of this in Walt’s decision to not hire black employees (with the Song of the South being a major exception) and personally firing Tommy Kirk after confirmed suspensions that he was gay (incidentally, Disney welcomed Tommy Kirk back into the family in 2006 by bestowing him with a “Disney Legend” award). According to Disney’s biographer, Disney didn’t want to “ruin the illusion of the magic world of Disney.” Business Week writes about this, which you can read by clicking here.

When America was on the cusp of changing mainstream attitudes about race, Disney himself chose to be lagging when it came to the arc of race relations in this country.

Fast forward to 2013, and now that we are on the cusp of changing mainstream attitudes about gay rights (with marriage laws still in flux), the Disney corporation is taking a more progressive attitude, by suspending the employee that is on the lagging side of the arc.

Of course, you could see both decisions are driven by money. With Disney himself, the point was to appeal to the 1950s and early 1960s American middle-class, as they were directly his consumers. You could make the argument that he maximized profits by catering to their then-prevailing sensibilities. But with Disney Corporation today, they need to appeal to the advertisers that buy ad time on the A&E Channel. Although consumers account for some of the sales (such as when you buy a Duck Dynasty lunchbox at Wal-Mart), most of Duck Dynasty’s wealth creation that makes its way to Disney shareholders is the result of commercial ad space on the A&E network. If the A&E advertisers threatened to cease advertising in response to Robertson’s GQ interview, then you can argue that Disney hasn’t changed that much over the past fifty years: they are still following business calculations designed to maximize profits.

In some ways, a suspension can be a shrewd business decision. You satisfy the advertisers and general populace that “wanted to see something done”, and then when you bring him back to the show, there may be a renewed, bolstered interest in watching the program (think of Family Guy after bringing the dog “Brian” back) which could drive ratings higher and allows A&E to charge advertisers a higher rate, which in turn, enriches Disney shareholders even more so.

Originally posted 2013-12-19 19:34:42.

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3 thoughts on “Phil Robertson, Advertisers, And Disney Shareholders

  1. scchan_2009 says:

    I think this is a moment to see how Coke responded to Atlanta politicians and business leaders during Civil Right Movement. Paul Austin literally blackmailed the city that if Atlanta won't support MLK's Noble Prize, Coke was going to move its HQ away from Atlanta (the blackmail worked). Of course, Coke itself had it fair share of social issue controversies (all large companies have some here and there – just as Disney). Regardless, Paul Austin is probably one of the greatest CEOs of all time. The guy who backed MLK is also the person who oversees Coke to become a global brand name.

    Milton Friedman said while the only functional business ethics is to maximize profit for its shareholders, it is good business to play morally (bad company PR = bad profits). Buffett also said that he would not trade money for reputation. In the medium and longer run, Disney would benefit being portrayed as a socially responsible business – despite taking a taking a short term advertising hit. Good business leaders aim to maximize shareholder value over 10 years, and he/she must make choices that good for the long term over the short term.

    As a bit more humorous side of business ethics with the "duck" word, a couple of years ago AFLAC fired Gilbert Gottfried as AFLAC duck for joking about Japanese tsunami.

  2. Clifford Stone says:

    No way! Just last week I saw the same article on website but the author was different. Are these two same thinking people or one of them is cheating? Websites should pay more attention to the uniqueness of their information.

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