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Disney Scraps $867 Million Florida Plan

The Walt Disney Company has abandoned its intention to invest $867 million in the construction of a new corporate campus in the state of Florida.

Disney Scraps $867 Million Florida Plan

Source: Pixabay.com

The rejection of a major investment project occurred against the backdrop of not having the most favorable relationship between the entertainment industry giant and the leadership of the state of Florida, led by Ron DeSantis.

The plan for the construction of the new campus provided that about 2,000 employees would move to a complex on Lake Nona, near Orlando.

The Florida governor’s office said the company’s decision was not surprising. The cancellation of the investment project was announced last Thursday, May 18, in an internal email. Josh D’amaro, head of the Disney theme parks division, commenting on the refusal to build a campus, mentioned a change in business conditions.

The letter does not directly mention the political course of the Florida authorities and not any statements directly related to Ron DeSantis, but many still perceived the decision of the industry giant to cancel the implementation of the investment project as an increase in tension in the already difficult relationship between Disney and state legislators.

Currently, the company’s financial position is under the influence of external negative factors. There is also a decline in market capitalization and a decrease in the value of shares. In these circumstances, decisions to cancel unsuccessful ventures and restructure business operations are logical.

An internal email from Disney indicates that the rejection of the project was approved after a change of leadership. In this case, it implies the resignation of CEO Bob Chapek in November last year, which was a shocking event for Hollywood.

The Lake Nona campus, whose construction is an unrealized intention, would have been home to employees of the secret division of the theme park research and development firm known as Imagineers.

Many of the employees who were supposed to move to Florida work in high-paying positions and specialize in technology-related activities.

Bob Iger, a former executive director who folded to replace his successor, Chapek, announced radical changes designed to boost the development of a business that found itself in a difficult situation due to the decline of the traditional film and television industry.

Disney launched the Disney+ streaming offer in 2019, the results of which are characterized by unprofitability. In the context of this decision, the company had a kind of protection provided by its popular theme parks. But the value of the entertainment industry giant’s shares has decreased by half compared to the figures of the spring of 2021. Investors expect hardship ahead.

The relationship between Disney and Florida began to deteriorate last year. The reason for this situation was that Ron DeSantis made claims to the company in connection with ignoring a state law that prohibits discussing sexual orientation and gender identity in public schools.

In April, Florida took control of the Reedy Creek Improvement District, known as Walt Disney World, which is a self-managed area with utilities and a fire department. Local legislators voted to grant the governor the authority to appoint members of the county’s governing council, and to deprive landowners of these opportunities, the largest of which is Disney.

The entertainment industry giant, in response to the results of the legislators’ vote, filed a lawsuit and accused officials of using the political mechanisms at their disposal against the company as revenge for expressing a point of view that certain representatives of the authorities do not approve of.

A few days later, Florida filed a counterclaim against Disney.

The company’s parks in this state are visited by about 50 million people annually. A week ago, during a conversation with investors, Iger doubted that the leadership of this region is interested in developing Disney’s business.

Aubrey Jewett, a professor of politics at the University of Central Florida, said that, in his opinion, the governor of the state and his allies, when deciding on actions against the company, did not take into account the long-term consequences of this initiative.

As we have reported earlier, Disney+ Streaming Service Loses 4 Million Subscribers in First Quarter.

 

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.