The Walt Disney Co. (NYSE:DIS) has in recent years been an LGBT-friendly company, but its latest move shows that it is willing to risk angering a major national youth organization with its continued support of equal rights for gay people.
The company has told the local Boy Scouts in the Central Florida area where Disney World is located that it will be cutting off grant funding to youth organization unless it reverses its ban on gay leader, the Orlando Sentinel reported.
Disney has declined to comment on the issue but a spokesperson did direct a Sentinel reporter to a corporate policy of not giving grants to groups that "operate or support activities that are counter to the policies of The Walt Disney Company," which is considered a gay-friendly employer.
Is Disney part of a growing trend?
Scouts for Equality, a Boy Scouts of America alumni association dedicated to ending the BSA's ban on gay members and leaders, has led the charge against businesses supporting the Scouts.
Since Scouts for Equality founding in 2012, it has been part of getting seven corporate sponsors -- Lockheed Martin (NYSE:LMT), Caterpillar (NYSE:CAT), Major League Soccer, Merck (NYSE:MRK), Intel (NASDAQ:INTC), UPS (NYSE:UPS) and now Walt Disney -- to end their partnerships with BSA.
"We're never happy to see Scouting suffer as a result of the BSA's anti-gay policy, but Disney made the right decision to withhold support until Scouting is fully inclusive," said Eagle Scout and Scouts for Equality co-founder Zach Wahls on the group's website. "Scouts for Equality will continue to advocate for a fully inclusive membership policy, to help build a stronger Scouting community that is eligible for the support of Corporate America."
Is it bad for Disney's business?
Taking any political stand -- really any stand at all -- can be a mixed blessing for any company. If Disney CEO Robert Iger announced that his favorite singer is Billy Joel it might endear him to other Joel fans and slightly annoy people who dislike the singer. Having a widely reported company position on an issue as controversial as gay rights might have some negative business implications.
In 2011, for example, Christian group Florida Family Association flew banners outside Walt Disney World protesting the company hosting a "Gay Day" celebration, reported WMCT 5, a Florida television station. "Gay Day" is a boon for the Orlando-area as the TV station estimated it brings in $150 million to the region
"Florida Family Association claims thousands of people enter the park, then turn around, and leave when they see the same sex couples, saying mainstream America is offended. Disney and event organizers say that's just not true," the article reported.
Disney has also faced protests for other pro-gay moves, including a storyline on its "Good Luck Charlie" television program that includes characters who are lesbian parents.
The conservative group One Million Moms protested the storyline calling on Disney to "to abandon their plans to corrupt the children's network with LGBT content," the Huffington Post reported.
It's tough to tell if there was any negative business impact from the airing of the controversial episode as the series already has a planned end date when the lesbian couple debuted. But based on ratings for the Disney Channel, it does not appear to have cost the company any audience.
"Disney Channel stands as TV's #1 total day network for the 34th consecutive month in kids 6-11 and 46th straight month in Tweens 9-14. The finale of "Good Luck Charlie" is the month's #1 Cable TV Telecast With Kids 6-11 and Tweens," according to a January Disney press release.
It might be good for Disney's business
Joe Solmonese, former president of the Human Rights Campaign and currently managing director of the corporate recovery firm Gavin/Solmonese, told the Fool that Disney's decision to no longer support the Boy Scouts financially is not only a good decision because it's the right thing to do, but also because it's absolutely good for business.
"Corporate philanthropy is, among other things, a reflection of a company's values. Disney is a company that has been on the cutting edge of creating a welcoming and inclusive workplace environment. The Boy Scouts of America, unfortunately, have not. So this decision is one that makes perfect sense to me and is grounded in Disney's business case, corporate values, and philanthropic philosophy," Solmonese said.
Solmonese was instrumental in passing landmark legislation such as the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act, as well as the repeal of "Don't Ask, Don't Tell."
Disney is doing the right thing
While taking a stand against the Boy Scouts' ban on gay leaders may ultimately be good for the bottom line, Disney's commitment to LGBT rights doesn't really feel like a decision made solely for financial reasons. I'm not generally a fan of Disney World and I find the message in an awful lot of the Disney "princess" movies fairly repugnant ("the goal in life is to get a boy to like you" is a recurring theme), but in this case the company has done the right thing.
It's important to note that Disney isn't telling the BSA what to do, it's simply saying that it won't support an organization that discriminates. That stand -- even if you agree with the Boy Scouts' right to continue its no-gay-leaders policy -- is a noble one and should be good for business.
Daniel Kline has no position in any stocks mentioned. The Motley Fool recommends Intel, United Parcel Service, and Walt Disney. The Motley Fool owns shares of Intel, Lockheed Martin, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.