DeSantis Defies Bob Iger, Calls Disney Suit ‘Political’

(Bloomberg) -- Walt Disney Co. Chief Executive Officer Bob Iger had enough.

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After Florida Governor Ron DeSantis began pushing legislation that could upend Disney’s theme-park development plans and regulate its monorails, and even floated the idea of building a prison near Walt Disney World, the company sued, accusing the Republican of breach of contract and violating its free speech rights.

“Disney expressed its opinion on state legislation and was then punished by the state for doing so,” the company said in a filing Wednesday in federal court in Florida. “This is as clear a case of retaliation as this court is ever likely to see.”

DeSantis responded Thursday from a stop on a tour of Israel, saying the suit has no merit and called Disney’s move “political.”

“The days of putting one company on a pedestal with no accountability are over in the state of Florida,” the governor said.

This isn’t what was supposed to happen when Iger returned to lead Disney in November following a series of missteps by his predecessor. Bob Chapek, his handpicked successor, stumbled into a fight with DeSantis over legislation to restrict discussion of gender identity in primary schools, after being pushed into publicly opposing the measure by his employees.

Read More: Disney Versus DeSantis: A Timeline of the Florida Political Feud

With 15 years’ experience as Disney CEO, Iger was expected to turn down the tension. Instead the 72-year-old executive, a Democrat who once considered running for president, has escalated the fight, talking about the company’s battle with conservatives in terms that evoke the civil rights movement.

“He feels they’re being treated unfairly, he’s being pushed by the government in a way the company never has,” said Dennis Speigel, a theme park consultant in Cincinnati who has followed Iger for years.

DeSantis has inflamed the dispute, too, far beyond school policy. He pushed for and signed legislation to dissolve the company-run municipal district that provides basic services to Disney World. Initially, Chapek and Disney largely kept quiet, refusing to engage in a war of words with the governor, who’s considered a leading candidate for the Republican presidential nomination.

But that changed with Iger, who publicly called out DeSantis at Disney’s annual meeting earlier this month. He described the governor’s positions as “anti-business and anti-Florida.”

“Disney finally felt like they had no choice, the governor was making it clear that they were going to push until they had a lot of control of the business,” said Aubrey Jewett, a political science professor at the University of Central Florida.

Disney isn’t commenting beyond the lawsuit.

Iger knows as well as anyone the importance of the Florida theme parks to the company. The business globally generated $7.9 billion in profit last year, two-thirds of the company’s total, as Disney continues to lose money its video streaming efforts.

Iger has tried to make the case that Disney has a lot to contribute to Florida as one of the state’s largest employers and taxpayers. It has announced plans to invest $15 billion in its local resorts over the next decade. The company recently reached a new labor agreement in Florida, boosting minimum pay to $18 an hour.

Disney might have benefited by filing its lawsuit sooner, before the municipal district was reconstructed, according to Jacob Schumer, an attorney at the firm Shepard, Smith, Kohlmyer & Hand in Maitland, Florida.

“Disney has always had a strong case and now they’re bringing it,” Schumer said. “The real question for Disney, and for the case, is what kind of remedy the courts have.”

Still, the fight with DeSantis could backfire. The Central Florida Tourism Oversight District, the new name of the entity overseeing Disney’s infrastructure and which is now run by DeSantis appointees, could complicate everything from theme-park expansion plans to power-supply contracts. Though he’s trailing Donald Trump presently, a President DeSantis could haunt the company for years, with the now 44-year-old politician potentially weighing in on everything from mergers to trade policy.

DeSantis has positioned the Disney war as part of a broader fight, saying the company is trying to impose its LGBTQ views on children.

The governor’s criticism of the municipal district, which was previously controlled by Disney but allowed to borrow under cheaper municipal finance rates, has some merit, according to Peter Ricci, a professor of hospitality management at Florida Atlantic University.

“The agreement Disney got with the government is exceptionally preferential treatment, and it’s an unfair playing field because none of the other parks or tourism businesses in Florida have that,” Ricci said.

But, he notes, the state also owes a lot to the company.

“Disney made Florida what it is today,” he said.

--With assistance from Felipe Marques.

(Updates with DeSantis response in fourth paragraph.)

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