Disney's battle with Ron DeSantis escalates as company prepares for layoffs

Disney (DIS)'s battle with Florida Governor Ron DeSantis just went to another level.

The company once again outmaneuvered the politician to retain control of its long-standing special tax district, formerly known as Reedy Creek.

The board revealed on Wednesday that Disney signed another "11th hour" agreement that allows it to set its own utility rates at its Orlando-based theme parks through 2032 — a time when DeSantis would no longer be in the governor's seat.

Prior to that reveal, the board uncovered Disney passed a separate, last minute agreement which blocks the board from making major changes to its resort or theme parks.

The move is the latest in a tit-for-tat that has captured the attention of lawmakers on both sides of the political aisle as DeSantis attempts to thwart Disney's plans.

Earlier this week, the governor announced new legislation that would require Disney to adhere to further inspections of its theme parks.

"They are not superior to the laws that are enacted by the people of the state of Florida," DeSantis said at a press conference on Monday. "That’s not going to work, that’s not going to fly."

DeSantis added he's open to developing land near Disney as a way to exercise further control, floating possibilities like a state park or even a state prison. He also suggested the board should consider raising taxes on the company.

Disney, which has faced criticism from the board over its lack of affordable housing, said on Wednesday it will break ground next year on a previously announced affordable housing development just a few miles away from the Magic Kingdom. The development, set for completion in 2026, will include approximately 1,400 total units over 80 acres of land.

Yahoo Finance reached out to both Disney and DeSantis for comment but did not immediately hear back.

Bob Iger defends Disney

Disney CEO Bob Iger defended the company's actions and denounced DeSantis' practices during its annual meeting of shareholders earlier this month.

"A company has a right to freedom of speech just like individuals do," Iger said at the time, describing DeSantis' policies as "anti-business" and "anti-Florida."

The fight stems from what has largely been seen as a politically-targeted response over Disney's reaction to the so-called "Don't Say Gay" law, which forbids instruction on sexual orientation and gender identity from kindergarten through third grade. In 2022, then-CEO Bob Chapek condemned it at the company's annual shareholder meeting after initially deciding not to speak publicly on the matter.

That decision set off the political firestorm seen today. Amid the battle, Disney announced its first-ever Pride Month event on Monday.

Disney's DeSantis troubles come as the company resets its business in an effort to improve free cash flow and eliminate $5.5 billion in costs, including $3 billion in content costs.

The company is reportedly planning thousands of job cuts next week as part of its broader effort to slash 7,000 jobs by the summer. The layoffs will include eliminating 15% of its entertainment division, along with various on-air and management positions at ESPN.

Iger, who stepped back into the CEO position in November, has remained hyper-focused on profitability as investors shift focus away from subscriber growth. The company's direct-to-consumer division shed a whopping $4 billion-plus in its fiscal 2022 ended Oct. 1, after it spent an estimated $33 billion on content last year.

Since then, Iger has stressed a direct link between content decisions and financial performance, especially amid a challenging macroeconomic environment that has pressured other media giants — like Warner Bros. Discovery (WBD) and Paramount Global (PARA) — to enact their own cost-saving initiatives.

In addition to the layoffs announced in February, Disney also disclosed plans to restructure the organization into three core business segments: Disney Entertainment, ESPN, and Disney Parks, Experiences and Products.

At the time, Iger said the new strategic organization, "will result in a more cost-effective coordinated and streamlined approach to our operations."

"We expect cost reduction initiatives to really start to kick in during the June and Sept quarters, driving loss improvement in Streaming and smaller [year-over-year operating income] declines in Linear Networks," Deutsche Bank said in a note earlier this week, reiterating its Buy rating on the stock.

Disney is set to report its fiscal second quarter earnings results on May 10.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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