Quantfury Gazette

Disney (NYSE: DIS) learns that money likes silence

by
Nathan Crooks
Quantfury Team
disney

One of the weirdest fights ever has finally ended, with Walt Disney (NYSE: DIS) and the state of Florida quietly agreeing—at least for now—to bury the hatchet and get back to the business of expanding the most famous theme park in the world. 

The nasty dispute first broke out more than two years ago after Disney took a very public stance against a law backed by governor Ron DeSantis that curtailed instruction about sexual orientation and gender identity in public schools. He responded in a bitter tit for tat and went after the company’s self-governance privileges in the state.

Now, both sides have stepped back from the brink with a fresh 15-year deal that will see the entertainment giant invest $17 billion on the continued expansion of its Walt Disney World Resort in Orlando. While DeSantis, a Republican, did manage to get control of the theme park’s special administrative district, he appointed people seen as friendly to the company to run it.

The reason for détente is obvious: it’s a partnership that’s simply too big to fail. Disney and Florida go hand in hand like sunshine and tan lines, and no one was going to benefit from a prolonged dispute that pitted the state against its biggest employer. But it’s a relationship that flows both ways, with the state just as important to the company as the company is to the state. While many die-hard DeSantis foes had argued at the height of the drama that the company should just pack up and leave the state, that’s simply never going to happen. 

Indeed, Disney’s latest earnings release shows the Orlando park and a Florida-based cruise line among the only bright spots amid ongoing challenges to boost a struggling entertainment segment and streaming business. While rising 13% this year, shares in the firm are still trading 26% below levels seen right before the DeSantis dispute escalated.

DeSantis plugged the state’s economy last week, noting that its gross domestic product was growing at twice the rate of the national average. “Since quarter one of 2019, we’ve grown 22%, while the US overall has grown 11%. It just shows you that policy matters. Leadership matters,” he said.

The now settled ordeal has lessons for both DeSantis and Disney. While the anti-woke crusade resonated with many Republican base voters as DeSantis embarked on a now failed campaign to grab the party’s nomination ahead of presidential elections later this year, many Florida residents found the matter off-putting. Tourism is a lifeblood of the state, and everyone living there knows who butters their bread. Disney, meanwhile, may want to think twice about political activism when it comes to divisive issues and a polarized electorate.

The latest agreement allows both sides to claim a win, although DeSantis and the company have been uncharacteristically quiet about it in a sign that they both may want to just move on and chalk up the whole thing as a sort of pandemic-era freakout. Disney may have more political controversy on the horizon, however, after a video emerged last week that purportedly shows a company executive confessing that “white men” can’t be hired for some roles. While Elon Musk responded to the revelation by saying “this is messed up,” DeSantis has so far not answered calls on X to comment on the matter. The truce seems to be holding for now.

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