While Florida Gov. Ron DeSantis has used Disney as a foil to show off his right wing, anti-woke credentials, the company has tried to keep things professional.
That’s partly because Disney doesn’t gain anything by angering the far-right conservatives DeSantis counts as his base and in part because Chief Executive Bob Iger has a business to run, not an election to win.
DeSantis wants to leverage Walt Disney’s (DIS) – Get Free Report public disavowal of his so-called Don’t Say Gay legislation to score political points. The company, led by Iger, has maintained that it should be able to exercise the right to free speech without the governor of a state where it has a massive business operation threatening political retaliation.
Iger, who has mostly stayed above the political fray, directly addressed the Florida situation during Disney’s second-quarter-earnings call.
“Regarding Florida, I have got a few things I want to say about that,” he said. “First of all, I think the case that we filed last month made our position and the facts very clear and that is really that this is about one thing and one thing only and that is retaliating against us for taking a position about pending legislation. And we believe that in us taking that position, we are merely exercising our right to free speech,”
Just addressing DeSantis verbally, however, does not meet Disney’s legal obligations as a public company. The company also disclosed, in its 10-Q filing with the Securities and Exchange Commission, that it saw the governor and Florida’s legislature as an operating risk.
DeSantis Joins Some Ugly Company
Disney does business worldwide and regularly includes language in its SEC filings about the risks of operating in countries like China or Russia, which are governed as dictatorships. The company broadly warns of those risks in its quarterly filings.
In addition, ongoing and future developments in international political, trade, and security policy may lead to new regulations limiting international trade and investment and disrupting our operations outside the U.S., including our international theme parks and resorts operations in France, mainland China, and Hong Kong. For example, in 2019 India implemented regulations and tariffs impacting certain bundling of channels; in 2022 the U.S. and other countries implemented a series of sanctions against Russia in response to events in Russia and Ukraine;
Those are boilerplate warnings that any company with exposure to those markets might choose to declare to shareholders. Warning about a local government, the State of Florida in this case, is a more unusual step.
“In Florida, steps directed at the company (including the passage of legislation) have been taken and future actions have been threatened, which collectively could negatively impact (and may have already impacted) our ability to execute on our business strategy, our costs and the profitability of our operations in Florida,” the company wrote in its most-recent 10-Q filing.
Disney Does Have Leverage (but Only Some)
Despite the fever dreams of some politicians in North Carolina, Disney can’t pack up Disney World and move it elsewhere. The logistics and expense of doing that make it impossible, and the reality is that the company operates in Florida because the state has the mix of climate, cheap land, and easy access that make it perfect for Disney World.
Disney can’t leave Florida, but Iger did make clear during the earnings call that it could do one thing if DeSantis does not go back to treating the company like a business instead of a political rival.
“We have a huge opportunity to continue to invest in Florida. I noted that our plans are to invest $17 billion over the next 10 years, which is what the state should want us to do,” he shared.
Disney, he noted, was not looking for special treatment and said that the company’s special district, which DeSantis has targeted, was not a perk unique to the Mouse House.
“Also, this is not about special privileges or a level playing field or Disney in any way using its leverage around the state of Florida,” he said. “But since there’s been a lot said about special districts and the arrangement that we have, I want to set the record straight on that, too. There are about 2,000 special districts in Florida. Most are established to foster investor development — we were one of them.”
The Villages retirement community and the Daytona Speedway also have special districts but have not been subject to special scrutiny from DeSantis.