Disney cancels plan to move 2,000 workers to Florida amid DeSantis fight

Last week, Walt Disney Co. Chief Executive Bob Iger issued a not-very-subtle challenge to the state of Florida and its Republican Gov. Ron DeSantis, who has been openly attacking the company as a “woke corporation” as he prepares for an expected presidential run.

Disney, already Florida’s largest private employer, has designs to significantly increase its presence and spending in the Sunshine State, where it has operated its massive tourism destination for more than 50 years. That means jobs and taxes. Disney contributed more than $1 billion to state and local coffers last year.

“Does the state want us to invest more, employ more people and pay more taxes, or not?” Iger asked rhetorically on a call with Wall Street analysts.

On Thursday, Disney gave Florida and DeSantis a more concrete idea of what Iger meant.

The company told staff it has canceled its plans for a new $1-billion campus in Central Florida, citing “new leadership and changing business conditions” and forsaking the prospect of hundreds of millions of dollars in tax benefits.

The Burbank entertainment giant had planned to relocate 2,000 jobs — mostly from California — to a sprawling office complex near Orlando International Airport, which serves as a tourist portal to Walt Disney World. Executives explained the move by touting Florida’s business-friendly policies.

But on Thursday, Disney essentially told Florida, “Not worth it.”

Whatever advantages Disney — which is in the middle of a wide-ranging cost-savings effort that has included thousands of layoffs — hoped to gain from moving employees out of California, they were outweighed by an increasingly hostile environment in the state.

Josh D’Amaro, chairman of Disney’s parks, experiences and products division, cited “new leadership and changing business conditions” for the about-face.

“Given the considerable changes that have occurred since the announcement of this project, including new leadership and changing business conditions, we have decided not to move forward with construction of the campus,” D’Amaro said, without mentioning DeSantis. “This was not an easy decision to make, but I believe it is the right one. As a result, we will no longer be asking our employees to relocate.”

The decision marks a striking reversal. The company in July 2021 said it planned to move staffers to the Orlando community of Lake Nona to take advantage of roughly $570 million in tax breaks.

But while some employees have already moved to Central Florida, the plan faced considerable pushback from other Disney workers in Southern California, especially as state officials became increasingly adversarial toward Disney and DeSantis embraced anti-LGBTQ+ legislation. Now Disney will not only halt its relocation plans, but will also consider moving employees back to California.

“For those who have already moved, we will talk to you individually about your situation, including the possibility of moving you back,” D’Amaro wrote.

Construction had not yet broken ground on the Lake Nona project.

DeSantis’ office downplayed the news.

“Nothing ever came of the project, and the state was unsure whether it would come to fruition,” DeSantis press secretary Jeremy T. Redfern said in a statement. “Given the company’s financial straits, falling market cap and declining stock price, it is unsurprising that they would restructure their business operations and cancel unsuccessful ventures.”

California Gov. Gavin Newsom cheered Disney’s decision.

“Authoritarian policies have consequences,” Newsom said. “This announcement is a victory for California, and the tens of thousands of Disney employees who know they can live in a state where they are respected and safe.”

The planned move was the source of significant animosity toward then-Chief Executive Bob Chapek, who was named to the top job in February 2020. Chapek’s tenure was dogged by a number of stumbles, including his clumsy handling of the company’s response to the Florida legislation amid pressure from employees.

Disney’s board of directors fired Chapek in November, replacing him with the company’s previous leader, Bob Iger, who’d run Disney successfully for 15 years.

Disney’s feud with DeSantis has stretched on for more than a year, with tensions reaching new heights after the company spoke out against the Parental Rights in Education bill, which banned classroom instruction of sexual orientation and gender in kindergarten through third grade. The law, known to opponents as “don’t say gay,” has since been expanded.

Disney recently sued DeSantis for what it called a “campaign of government retaliation” to strip the company of its special privileges in the district that encompasses Walt Disney World. DeSantis earlier this year handpicked a new board for the former Reedy Creek Improvement District, which Disney previously controlled as essentially its own municipal government.

Taking on Disney has been a defining feature of DeSantis’ national political persona as he seeks to distinguish himself from former President Trump, who is leading in polls of Republican voters, in the race to become the Republican presidential nominee in 2024.

DeSantis signed legislation in February that gave him control of Reedy Creek, which has been renamed the Central Florida Tourism Oversight District.

Disney outmaneuvered DeSantis’ incoming board by inking new development deals with the outgoing government body that significantly limited the new group’s power. The DeSantis-backed board last month voted to invalidate the agreements, prompting Disney to sue in federal court.

The district has in turn sued Disney, asking a Florida court to declare the company’s development agreements invalid. Disney filed a motion to dismiss the board’s complaint, saying that Florida legislative action to revoke the deals rendered the district’s case moot.

The spat has put Iger in the awkward position of being in direct conflict with one of its most important business hubs, at a time when he’s also trying to boost profits and find $5.5 billion in savings from the company. As part of that cost-cutting effort, Disney is shedding about 7,000 jobs.

Disney is trying to turn its financial situation around as it continues to lose money from its investments in streaming and as its traditional television networks division declines due to cord-cutting and increased sports rights costs for ESPN.

The company’s famed theme parks remain the biggest driver of profits as the tourism business roars back from the COVID-19 pandemic. During the most recent fiscal quarter, Disney’s parks, experiences and products business accounted for 36% of the company total revenue and two-thirds of its operating income.

To continue the momentum, Disney has repeatedly spoken about its desire to do more business in Florida, where it already has 75,000 employees.

“I remain optimistic about the direction of our Walt Disney World business,” D’Amaro said in his email. “We have plans to invest $17 billion and create 13,000 jobs over the next ten years. I hope we’re able to do so.”

The Lake Nona campus had already been facing questions over whether it would ever see the light of day. When the complex was first announced, the move was expected to take 18 months, the company said at the time.

But the project faced delays. In June 2022, Disney said the new offices would take much longer to finish than expected, with Disney anticipating an opening date of 2026, representing a roughly three-year holdup. Disney at the time blamed issues with the construction timeline.