Large International Corporations Should Keep Their Mouth Shut on Social Issues

by Evan

Georgia’s new abortion law has been receiving a lot of attention from various industries, however, I believe most coproations should stay out of such a heated social issue.  Specifically, the initial reaction from Disney and Netflix is what grabbed my attention, mainly because, who the hell knew Georgia had a film industry?

Who Knew Georgia had a Film Industry?

I was shocked to learn that anything was filmed in Georgia! and it isn’t just a few things, according to Forbes,

Georgia acts as a prime production destination for the TV and film industry. In the U.S., it is the third largest production hub for film and TV after California and New York.

The state offers a tax incentive program to production companies that was introduced around ten years ago. Georgia provides production companies a 20% tax credit for any production or post-production in the state over $500,000. Production companies can take advantage of the tax break even if the spend is spread out over multiple production schedules. Production companies can benefit from another 10% credit with the inclusion of the state logo in the credits.

According to the New York Times, the production business accounted $2.7 billion in annual revenue. That might be understating the impact. According to CNBC, the state attracted ~455 projects the film and TV production business last year and 92,000 jobs came from the production business, accounting for ~$4.5 billion in wages. Moreover, it reportedly accounted for $9.5 billion in economic impact, which presumably includes not only the direct revenue generated by those businesses, but also the secondary and tertiary effects of having them stationed there.

Looking at Georgia’s state revenue, net revenue collection for FY2018 was $22.7 billion. Using these numbers as a rough estimate would mean the production business accounts for approximately 10% of state revenue. Not the primary revenue driver, but still notable.

Wow! Who Knew?

NetFlix and Disney’s Reaction to Georgia Law

While Disney’s CEO, Bob Iger, said that they would probably cease filming in Georgia, Netflix took an even more aggressive stance stating via their Chief Content Officer,

We have many women working on productions in Georgia, whose rights, along with millions of others, will be severely restricted by this law…It’s why we will work with the ACLU and others to fight it in court. Given the legislation has not yet been implemented, we’ll continue to film there, while also supporting partners and artists who choose not to. Should it ever come into effect, we’d rethink our entire investment in Georgia.

Woah, they are going to use shareholder’s capital to fight the cause.

While I am pro-choice, I do not think these, (and apparently 180 other CEOs), should be taking such a vocal stance on such a heated social issue for two main reasons.

The Corporation is Likely to be Hypocritical

It took internet sleuths about 30 minutes to figure out just how hypocritical Disney is/was in multiple ways:

Filming

The law in question, which Georgia Gov. Brian Kemp (R.) signed on May 7, outlaws most abortions on babies who have a detectable heartbeat, which typically occurs six weeks after conception. The law is due to take effect on Jan. 1, but is expected to face legal challenges before then.

Iger issued his warning to Georgia ahead of the dedication for a new Star Wars section at Disneyland. It is unclear whether Iger, whose company owns the Star Wars franchise, knows that Star Wars: The Force Awakens, a 2015 movie that Disney distributed, was filmed in Abu Dhabi, the capital of the United Arab Emirates, which outlaws all abortions except when the mother’s life is at risk or when the baby has a fatal “abnormality.” Even in those situations, doctors can only perform abortions within 120 days of pregnancy.

Disney has recently filmed in other countries with strict laws against abortion. Part of the 2019 film Aladdin, which Disney produced, was shot in Jordan. The Jordanian penal code criminalizes abortion. The only exceptions are fetal impairment, when the mother’s life is in danger, and other, limited circumstances to protect her physical and mental health. Otherwise, the mothers—not just the doctors—can be imprisoned

Theme Parks

The Wall Street Journal editorial board noted the inconsistency in Disney’s policies, and specifically pointed out that the company also touts its theme park and films in China, where Turkic Muslims are being held in internment camps

and it didn’t take more than a google search to find that Disney has had problems with child labor.

Similarly NetFlix also filmed in Middle East Countries with much stricter laws.

The Corporation is Alienating Some Part of their Customers

As stated, I am pro-choice but a lot of the customers of these two companies (and the other 180 who later signed on) are not.  There are a lot of nuances as to how many are actually pro-life vs pro-choice given the wording of polling being able to sway this type of discussion (think: Should a mother be able to abort a third trimester viable baby because she doesn’t want him or her vs. should a woman’s life be saved because of a fetus who threatens her life in the first 6 weeks)?  Notwithstanding, the minutia and details there is still a good portion of the population that are pro-life, and an overt statement could turn off some potential customers.

This is particularly troublesome when the company is a global powerhouse.  There are entire cultures that could feel opposite of a particular position half way across the world.

Does Any of this Really Matter? Is there a Conclusion?

Nope.  Netflix, Disney and the 180 other companies or so are going to dip their toes in the water because that is what is demanded of them today.  I am pretty bullish on Disney right now and this move isn’t slowing me down as a shareholder or a reluctant consumer (2 kids) but it is something that just never really made a lot of sense to me.

You may also like

2 comments

Nick June 21, 2019 - 10:48 pm

First of all, companies like Disney and Netflix have no influence over the laws in a place like the UAE– threatening to reduce their already incredibly limited financial influence in that region would make no difference to anyone. But in Georgia, that’s an entirely different story– presumably they’re more involved in the state’s business, and more importantly, their voice might actually be heard by the state legislators, and other companies that could follow suit.

Even all that aside, you can’t just win an argument by suggesting that a past hypocritical action implies a company should never again do something that it considers to be good.

Reply
Evan June 24, 2019 - 11:33 pm

I completely disagree with your two points. The first that they do not have influence is just lunacy. Maybe not the UAE, bu you don’t think there are entire countries that will fold to the likes, wants, and demands of a Disney? As for the second it isn’t past hypocritical actions, it is ongoing, current hypocrisy that makes zero sense to me.

Reply

Leave a Comment