Inside Disney’s Ugly COVID Reopening Battle in California

When The Walt Disney Co. planned to reopen its American theme parks in July, they released a now-notorious trailer, splicing shots of theme park attractions with a chorus of Disney cast members chiming “Welcome home!” The ad projected an air of insistent normalcy, disrupted only by the workers’ uniform masks. It seemed to contain the latent hopes of the Trumpian COVID-19 era: the desire to not let the virus “dominate” lives, to relax into the open arms of entertainment, to return to business as usual with modest accommodations: Masks, ample sanitizer, a “no hugging” rule.

But in California, the welcome was not especially warm. When the company announced plans to reopen the Anaheim resort, it had not yet gotten approval from the state. Gov. Gavin Newsom’s pandemic roadmap, which assessed preparedness in a four-phase system, put amusement parks in Stage Four—so far down the line that he had not yet released reopening guidelines. Disney backtracked under pressure, opening just a small retail and restaurant strip. But the entertainment empire, one of the state’s largest employers and a major source of tourism revenue, did not let up in its campaign to reopen—waging a three-month battle with California that has at times caught workers in its crossfires.

“All of our other theme parks both in the United States and around the world have been allowed to open on the strength of our proven ability to operate with responsible health safety protocols,” a Disney spokesperson told The Daily Beast in a written statement. “Promoting health and safety for our guests, cast members, and the larger community is a responsibility we take seriously.”

In September, as rumors floated that the company internally planned for a late-month reopening, tensions between Disney and California were at a high. After a surge in summer cases, the state had revamped its reopening protocols, with a state-wide tier system for reopening businesses. Theme parks remained in the final tier. On Sept. 22, Chairman of Disney Parks, Experiences, and Product’s Josh D’Amaro made a public plea that the Governor “treat theme parks like you would other sectors, and help us reopen.” (Other large venues like concert halls and convention centers have not been permitted to reopen). D’Amaro’s plea came with a warning. Nearly 80,000 Orange County jobs, he cautioned, lay on the line.

Gavin Newsom Ignores the Desperate Pleas of Hunger-Striking Disney Workers

Just days later, D’Amaro’s prediction proved true: Disney announced plans to lay off 28,000 domestic workers, almost all from theme parks, most from California. In a statement, the Chairman claimed the company’s financial struggles had been “exacerbated in California by the State’s unwillingness to lift restrictions that would allow Disneyland to reopen.” The layoffs, which will be finalized Nov. 1, could kick thousands of workers off their health insurance.

“[Cast members] are concerned about losing their health insurance seeing how serious this is now that Trump is sick,” the spouse of a Disney cast member told the Daily Beast anonymously this week. “That’s why they want to keep their jobs—especially now.”

The following week, Newsom answered D’Amaro’s request, announcing plans to release his guidelines on Oct. 2—just one day after President Trump announced he had tested positive for the coronavirus. But the proposed rules further angered industry executives. After seeing a draft, former Disney CEO Bob Iger quit the state’s COVID-19 task force in protest. The California Attractions and Parks Association, a trade group that includes Disney, called on Newsom to postpone the release and engage with the industry “in a more earnest manner” and “listen to the park operators’ expertise.”

The guidelines have not yet been released, as Newsom complied with the request. But an Anaheim official familiar with the draft told the O.C. Register that parks would have to open at just 25 percent capacity, only after the county reached the “minimal” final stage of Newsom’s reopening plan. Theme park journalist Carlye Wisel reported the restrictions also included advance reservations, face coverings, and limits on visitors traveling from outside a certain distance. A Disney spokesperson declined to comment on Iger’s rationale or what the company wanted from the finalized rules, and CAPA did not respond to requests for comment.

Orange County officials have taken Disney’s side in the dispute, pointing to a budget shortfall of some $100 million, though the county remains a “substantial” infection risk, according to the state’s reopening plan. Eighteen state congress members echoed the sentiment in a public letter to Newsom. In a Sept. press conference called “ReOpenOC Now,” Anaheim Mayor Harry Sidnu called on Newsom to release guidelines. “It’s a disaster right here!” he said, gesturing around him. “All the businesses are closed here. How long are you going to keep us closed? Give us the guidelines!”

Last week, O.C. Health Care Agency Director Dr. Clayton Chau greenlit the parks to reopen. “I have advocated for theme parks to be safely reopened in Tier 3—the Orange Tier,” Chau told The Daily Beast in a statement, referring to the “moderate” risk tier. Chau said he had assessed the risks in terms of physical health, but also “emotional health and economic/financial health.”

The financial health of The Walt Disney Co. specifically has taken a hit during the pandemic. In August, the company reported a loss of $2 billion in the months since shutdowns began. But the layoffs caused some, including heir Abigail Disney, to question the financial priorities of the company, which brought in nearly $70 billion in revenue last year. “If Disney had not spent down every penny of its cash on share buy-backs in 2019 (11.5 billion worth),” Disney wrote in a Sept. 29 Twitter thread, “perhaps there’d have been some dough on hand to ensure that even at a partial level they could continue to keep some of these workers on until things return to normal.”

Disney was referring to share buybacks, or when companies purchase stocks back from their shareholders. Buybacks reduce the amount of cash a company has on hand in exchange for minimizing dividends and consolidating corporate power. Sharply criticized by Wall Street critics like Elizabeth Warren, Bernie Sanders, and Kristen Gillibrand—all three of whom have advocated for banning the practice—stock buybacks have soared to record levels in recent years, largely due to Donald Trump’s 2017 Tax Cuts and Jobs Act, which lowered the corporate tax rate to 21 percent.

When lockdowns began in March, Disney navigated their financial shortfall by announcing executive pay cuts. Disney Executive Chairman Bob Iger, who ranked third on Equilar’s Highest-Paid CEOs list last year with a haul of $65 million—1,424 times that of the median Disney worker—agreed to forgo his full salary. Bob Chapek, Iger’s replacement as CEO, took a 50 percent salary cut, while vice-presidents reduced their salaries by 20 to 30 percent. The cuts barely scratched at the executives’ annual earnings, the majority of which come in bonuses (Chapek’s base salary is $2.5 million, for example, but he also receives a target bonus of $7.5 million and an incentive award of $15 million). “This temporary action will remain in effect until we foresee a substantive recovery in our business,” Chapek told staff in an email abstained by the L.A. Times.

In August, however, one month before the layoffs, Disney restored its executives’ salaries to pre-pandemic levels. A Disney spokesperson declined to comment on the change, or whether it indicated a “substantive recovery” in their business. To some extent it may—the Washington Post reported this month that investors have “display[ed] incredible faith” in its future profits. “Investors are such firm believers in Disney’s prospects that they’re willing to pay now for 44 years worth of potential earnings,” they wrote.

The next day, news broke that an activist investor—hedge fund billionaire Daniel Loeb—had urged the company in a letter to suspend its $3 billion annual dividend, meaning the money paid to shareholders for their investment, and reroute it, not to workers, but toward their new streaming platform, Disney+.

“It’s so heartless this is the moment Disney is choosing to cut so many off health insurance instead of taking a cut to upper management to help make up for losses,” the Cast Member’s spouse said. “Why not waive bonuses for Iger and Chapek if things are so bad financially for the company?”

As of now, unions are negotiating the terms of the layoffs with Disney. The cuts will primarily target part-time workers, who don’t qualify for benefits like child care, health care, and 401ks. But several unions told The Daily Beast that full-time workers in their membership had also been laid off. Chris Duarte, President of Workers United Local 50, told the Daily Beast 2,858 workers, or more than a third of their Disney membership, would be laid off, many of them full-time. “We’re still working out who exactly comprises the grand total number of 2,800 or so,” Duarte said. “We’re in a time crunch because the layoffs go into effect on Nov. 1.”

“We don’t know about the terms of health care yet,” said Maria Hernandez, spokesperson for hospitality union Unite Here! Local 11. “The right to be rehired if and when the pandemic ends is important to us.”

“My main concern is that we’re all safe going back,” said Inez Guzman, a furloughed full-time housekeeper at the Disneyland Hotel. “We live with a lot of older people—that’s true in my own family—and I can’t bring anything back to them.”

The stalemate has no obvious end in sight. In a press conference last week, Gov. Newsom announced that he felt “no hurry” in putting out reopening guidelines. “We’re going to be led by a health-first framework,” he said, “and we’re going to be stubborn about it.”

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