Walt Disney Co. DIS announced this week it was scrapping plans to build a billion-dollar office complex in Florida, citing considerable changes since the announcement of the project, including new leadership and changing business conditions.
The development assumes importance because of the ongoing feud between the entertainment giant and Florida Governor Ron DeSantis. A spokesperson for the governor reportedly said the move may have been precipitated by the decline in Disney's stock price.
What Happened: The decision to stall the project may have to do with both, said Matthew Belloni, founding partner at Puck News in an interview with CNBC.
Disney is in cost-cut "fire sale" mode, Belloni said, adding that the company is taking shows off of Disney+ and Hulu and laying off 7,000 people.
Although the move of the division to Florida would have saved the company money in the long term, there were a lot of costs associated with it, he noted,
"[Bob] Iger never liked it from a financial perspective but I think I also like the opportunity to poke DeSantis in the eye, a little bit here and say, listen, you’re going to battle. You’re going to lose these high-paying jobs. We’re just going to take them out of your state," Belloni said.
The decision to shift some of Disney’s California workforce to Florida was taken when Bob Chapek was the CEO and he has since then been replaced by Iger.
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Why It’s Important: Belloni said "This is a war."
“DeSantis declared war on Disney and Iger believes this is a battle that you can win," he added.
Iger is doing it in the courts in Florida and "in the hearts and minds" of Disney employees, Belloni said.
"His own employees like this. They like that he is standing up for the Disney values here against a Florida politician that has made Disney a punching bag in his own political ambitions," he said.
"And I think it is kind of hurting DeSantis."
Disney and DeSantis are warring over the former’s opposition to the “Don’t Say Gay” law passed by the state. In retaliation, the governor canceled the self-governing authority the mouse house enjoyed for the land surrounding its Florida theme park.
Disney on its part has filed a lawsuit against DeSantis and a five-member board that oversees government services at Disney World in federal court, claiming "a targeted campaign of government retaliation."
DeSantis, meanwhile, is widely expected to announce next week his candidacy for the Republican presidential primary for the 2024 elections.
In premarket trading on Friday, Disney shares were down 0.70% at $93.10, according to Benzinga Pro data.
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