Daily Traders Edge

Disney Made The Right Call For Investors In Canceling ‘Roseanne’

May 30
09:55 2018

We live in a world where good news travels fast and bad news travels even faster.

Case in point: over the course of just a few hours, Roseanne Barr sent out a racial slur via tweet, and effectively flushed her hit TV show and resurgent career down the toilet.

Asked why the ABC Network decided to cancel the show, a source told CNN, “It’s a question of right and wrong. And it’s a question of our company’s values.”

The Walt Disney Company is the parent company of ABC. Disney CEO Bob Iger tweeted: “There was only one thing to do here, and that was the right thing.”

Following the news, Disney shares traded down 2.5%.

From a shareholder’s perspective (disclosure: I own Disney shares),  I think the company made the right move terminating the show.

Clearly there are some negative repercussions. Losing the top-rated show on network television hurts momentum at ABC. The reboot of “Roseanne” premiered to big ratings earlier this year. Pre-production was already underway for a second season. Now the whole thing is done. And here I was just getting used to the grown up D.J. Conner!

But in this day and age, Disney’s corporate reputation means more than any single show on ABC. The broadcasting segment represented a mere 8.2% of Disney’s operating income last fiscal year.  Far more consequential are the Cable Network (36.2%), Parks and Resorts (25.5%), and the Studio Entertainment (15.9%) divisions.

By making the bold move of terminating the show as swiftly as it did, Disney put itself on the right side of a burgeoning trend investors are wise to monitor. That is: corporate responsibility.

When Roseanne went off the air twenty years ago, Twitter didn’t exist. Since then, mobile internet connectivity has ushered in a powerful wave of transparency and accountability.

Morality matters more in the modern corporate sphere.

Continue Reading at Forbes

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