It's been feast or famine for Walt Disney (NYSE:DIS) these days. Some of its operating segments have been smacked harder than others. With the presidential election now just two weeks away, it's a good time to wonder if Disney's chances for recovering from a historically dreadful quarter are better under President Trump or former Vice President Joe Biden.
Disney doesn't tend to take sides politically, at least on the national level. It has recently called out California Gov. Gavin Newsom for his refusal to allow theme parks to resume operations in the country's most populous state. Disneyland and its adjacent Disney's California Adventure attraction continue to be closed more than seven months after shutting down in the wake of the COVID-19 crisis. However, Newsom isn't up for re-election until 2022. It may bankroll efforts to block casino gambling in Florida or take a stance against net neutrality legislation, but the House of Mouse isn't a hotbed of political activity.
Will the ballot-box winner come Nov. 3 make a difference to Disney? There are plenty of moving parts to the media giant, so let's size up how its businesses would hold up under Trump or Biden -- and whether you should wait to see how the votes play out before making your next investing decision.
Haul of presidents
Disney over the years has historically thrived under Democrats and Republicans. It doesn't mean that the media mogul is immune to how things will play out in a couple of weeks, particularly when it comes to Disney's theme park operations. Biden is in favor of increasing the federal minimum wage to $15 and eliminating the tipped minimum wage. The immediate impact would be a boost in labor costs, and if Disney can't pass the increase on to its customers it would come at the expense of weaker margins. The counter to that argument is that lifting wage rates will make it easier for more workers to afford trips to Disney World, Disney+ subscriptions, and Disney Store shopping trips.
Another aspect of Disney's business that finds itself in political crosshairs is its penchant for acquisitions. Disney spent billions to acquire Pixar, Marvel, and Lucasfilm. It spent even more -- 11 figures apiece -- on Capital Cities/ABC and more recently 21st Century Fox. Disney isn't afraid to cut big checks, and eventually the world's most successful media mogul is going to be told to stop. Biden's platform involves strengthening antitrust enforcement. Trump's Republican camp has taken a lighter approach to regulatory oversight, but an important caveat is that the president is no friend of most media companies. He was vocal in opposing a CNN-related deal that eventually went through after a prolonged vetting process. Will ABC's hosting of Biden's town hall last week eat away at Trump support for the next major Disney deal? It's fair to say that Trump can hold a grudge.
Life for Disney would be different under Biden if he wins in November. Corporate tax rates will probably head higher, and that will weigh on earnings. However, a change at the top could also spur a boost in government spending that would help media stocks by breathing new life into the advertising and entertainment markets. No matter who wins on Nov. 3, Disney isn't likely to repeat the 42% plunge in revenue it posted in its fiscal third quarter. Disney will recover under Trump or Biden, so at the end of the day you really don't need to wait until after the election if you're already sizing up Disney as your next investment.