How the Disney vs. DeSantis Battle Ended in a Stalemate

In the months leading up to the settlement between Disney and Gov. Ron DeSantis, both sides were growing weary.

At the top of the year, Disney lost a pivotal First Amendment lawsuit claiming that the Republican governor violated its free speech rights by assuming control of the special tax district that encompasses the entertainment giant’s 25,000-acre resort. The ruling further endangered plans to invest $17 billion over the next decade to fuel growth at Walt Disney World.

More from The Hollywood Reporter

DeSantis wasn’t fairing any better. He lost hundreds of millions of dollars in economic development when Disney, calling him “anti-business,” yanked plans for an office complex in Orlando that would’ve added more than 2,000 high-paying jobs and faced the prospect of the company abandoning — or at least delaying — further investment. DeSantis and Disney had a lot to gain by pursuing the litigation, primarily unilateral developmental control of the company’s sprawling theme park. They also had even more to lose. A deal was in the air.

On March 27, they reached a détente. Under the settlement, Disney stipulated that an eleventh-hour legal maneuver it made in a bid to retain power over the district is “null and void.” It also agreed to pause an appeal of the ruling dismissing its First Amendment lawsuit while they negotiate a new development agreement.

The deal starts the process of winding down a multifront legal battle that began with Disney’s opposition to the Parental Rights in Education Act, a bill that barred discussion of gender identity and sexual orientation in the classroom for young students. In retaliation, DeSantis took over Disney’s special tax district that essentially allowed the company to govern itself within the borders of its resort.

Two years later, both sides are exiting the feud battered and bruised.

“They both called uncle and waved the white flag,” says Richard Foglesong, a retired political science professor and author of a book on Disney’s history in the state. “The continuation of this litigation wasn’t working for either of them.”

That hasn’t stopped Disney or DeSantis from proclaiming victory. The Republican governor said his actions had been “vindicated” with the deal, while president of Walt Disney World Resort Jeff Vahle stressed that it allowed the company to open “a new chapter of constructive engagement with the new leadership of the district.”

The optics of DeSantis’ retaliation against the largest employer and taxpayer in the state tell a different story. Disney may have made an ideal enemy when he was running for president on a culture warrior platform, but targeting the company doesn’t make as much sense now that he’s back in Florida for good. Critics see vulnerability. (Iger himself has signaled in recent months that culture wars haven’t helped Disney. “Creators lost sight of what their No. 1 objective needed to be,” the Disney CEO told Andrew Ross Sorkin at The New York Times‘ DealBook event on Nov. 29. “We have to entertain first. It’s not about messages.”)

Rep. Anna Eskamani, a Democrat from Orlando, questions whether DeSantis sacrificed the long-term economic interests of the state for a failed presidential campaign. “Over the years, his outsized influence and consolidation of political power has created an environment where there’s no checks and balances,” she says. “It’s been disastrous for our state.”

That includes the Central Florida Tourism Oversight District, formerly called Reedy Creek. After DeSantis usurped power, more than 30 workers resigned amid claims of mismanagement, Florida reporter Jason Garcia wrote last October. The departures were in key management positions, such as the district administrator, chief financial officer, building official, fire chief and district clerk. In an exit survey, a department director said, “The district is no longer functional” and that new leadership is “unqualified and incompetent.”

DeSantis extended what Disney likely perceived as a peace offering when he tapped CFTOD’s former administrator to head elections at Orange County. That opened up the job for Stephanie Kopelousos, the governor’s former legislative affairs director who was confirmed Wednesday and has a track record with helping Disney. In 2021, she wrote a carve-out to a social media law that exempted Disney. The olive branch was solidified with the appointment of Craig Mateer, founder of hospitality service CCM Capital Group and a longtime Disney contractor, to the board.

For Disney, its feud with DeSantis was one of several fires that it’s still trying to put out. Notably, the company didn’t plan on voicing opposition to the so-called “Don’t Say Gay” law. It initially stayed quiet and only publicly pushed back after employees denounced Disney’s silence on Florida’s passage of the bill. The result? A years-long, bitter feud with its most vital partner for its parks business that likely contributed to former chief executive Bob Chapek’s ouster and a dragging stock price last year before the latest rally, which culminated in a proxy fight with activist investor Nelson Peltz. Wednesday’s settlement arrived a week ahead of Disney shareholders casting votes at the company’s annual meeting on April 3.

“For corporations like Disney, they don’t want this kind of press,” says Tyrone Bland, chairman of strategic advisory firm Porter Tellus and former head of government affairs for CAA. “On the heels of the actors and writers strike, it had its hands full with a number of different battles. It didn’t need to be involved in what turned out to be a devolving court battle over an idealistic issue that ended up being a nonstarter for them. It demonstrates a lack of understanding of what the inevitable outcome of all of this was.”

To Disney’s benefit, the way in which DeSantis revoked its privileges of self-government gave it cover: The narrative revolved around retaliatory measures taken in response to the company’s opposition to a nationally unpopular law rather than the state reining in what could be perceived as corporate excess. Disney, for example, didn’t pay impact fees to help with transportation and other needs in central Florida and mostly barred affordable housing to be build on its land because residents would then be conferred voting rights in the district. There may have been less pushback had the governor moved to strip Disney of some of its powers without the appearance of suppressing free speech.

“Disney had unfair benefits, but DeSantis attacked them for the wrong reasons,” Foglesong says. “Therein lies the conflict.”

Best of The Hollywood Reporter