Disney's (NYSE:DIS) original theme park in California isn't going to open anytime soon. The state finally offered guidelines for its regional amusement parks and other gated attractions to reopen, and it's not what theme park operators wanted to hear.
California is gradually reopening its economy based on a four-tier system, and coronavirus cases would have to improve dramatically for Disneyland, Comcast's (NASDAQ:CMCSA) Universal Studios Hollywood, and many of the state's other high-volume touristy haunts to unlock their turnstiles.
This could take weeks; this could take months. Coronavirus cases in California peaked in late July, but they've held stubbornly steady since early September. With no clear visibility on when things will get better or if another surge is coming, it could take a sharp downturn in cases or an actual approved vaccine in wide circulation before Disneyland in California reopens.
Taking a stand
"We have proven that we can responsibly reopen, with science-based health and safety protocols strictly enforced at our theme park properties around the world," reads Tuesday's statement by Disneyland Resort chief Ken Potrock. "Nevertheless, the State of California continues to ignore this fact, instead mandating arbitrary guidelines that it knows are unworkable and that hold us to a standard vastly different from other reopened businesses and state-operated facilities."
Disneyland needs California politicos on its side to resume operations, but it's entitled to be angry. Every other Disney theme park has been open for months, and the gated attractions haven't been tied to any COVID-19 outbreaks. The health and safety measures that have become standard procedure for Disney -- mask requirements, social distancing, and ramped-up cleaning standards -- work.
Even union heads who at first objected to the media giant's initial July reopening plan showed support for Disneyland's reopening plan earlier this week. Maybe they saw the writing on the wall. There is little to negotiate between Disney and its unions if the world's largest theme park operator is staring at a prolonged downturn. If there were talks, it's fair to say that the House of Mouse would be the one with all of the leverage.
The layoffs in California will likely pick up in earnest at this point. Disney and Comcast are well-diversified media stocks, but shuttered theme parks in California will leave a crater-size hole in their financials for quarters to come.
Opening at 25% of capacity, whenever that becomes viable, is another factor that will nix a fairy tale ending in the coming months. Florida theme parks opened at roughly 25% of capacity in June and July, and all of the major operators have gone on to announce layoffs. Operating at a profit in this environment doesn't seem possible, but at least Disney and Comcast have pointed out that they're losing less money in Florida than they would if the parks had remained closed the way they are in California.
COVID-19 cases have shown a similar trajectory in California and Florida since their summertime peaks, so it's not as if one state's approach has been more successful than the other in curbing the pandemic. Disney and Comcast have proved in Florida (and in the rest of the world) that they can give patrons some much-needed escapism and employees some much-needed paychecks without making the COVID-19 crisis materially worse. History may come to vindicate California's approach, but right now it has to be frustrating to more than just the net defections out of the state.
Disneyland turned 65 on July 17, the day it was hoping to reopen. It didn't happen. Will it reopen in time to turn 66 next summer? No one knows at this point. Airplanes are in the air. Most movie theaters are firing up projectors. Eventually even the pandemic-kindling cruise ships will be back in business before Anaheim's Disneyland opens its gates. It's a small, small world for Disneyland's big, big problem.