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Disney scraps plans for new Florida campus amid feud with Gov. DeSantis

Yahoo Finance’s Allie Canal and Rick Newman join the Live Show to discuss Disney's plans for a new Florida campus amid the feud with Governor DeSantis.

Video Transcript

AKIKO FUJITA: Well, Disney is ramping up its battle against Florida Governor Ron DeSantis, now canceling plans for a new campus outside of Orlando. Ali Canal is here with the details on this, along with Rick Newman joining in on the conversation talking about the political implications. Ali.

ALEXANDRA CANAL: Hi, Akiko. Now, Disney didn't specifically say this was because of the governor, but you can probably surmise that the DeSantis drama played a significant role. According to an internal memo obtained by Yahoo Finance, Josh D'Amaro, who chairs the parks, products, and experience division at Disney, told employees today that the company, which had been building that new campus in the Lake Nona region of Orlando, was now scrapping those plans.

So no more construction on that campus and no more relocation requirements since about 2,000 California based employees were going to have to relocate to Florida. D'Amaro saying, quote, "given the considerable changes that have occurred since the announcement of this project, including new leadership and changing business conditions, we have decided not to move forward." Now, the relocation plans were first announced in July 2021 under then CEO Bob Chapek, with the employee campus originally set to open between 2022 and 2023.

That was eventually delayed to 2026. And now, of course, that is no longer. D'Amaro saying that Disney still has plans to invest $17 billion and create 13,000 jobs over the next 10 years in Orlando. He said Disney still has plans to do that.

But remember, just last week during the earnings call, Bob Iger got very frustrated with the DeSantis drama and basically said, does Governor DeSantis not want us to invest in the state of Florida? So this is just another development in that ongoing saga.

SEANA SMITH: Certainly is. Rick, what are the political implications here? Obviously, not good news, you wouldn't think here, for Governor DeSantis.

RICK NEWMAN: And it comes as he's apparently preparing to say formally that he's going to run for President next week. Bob Iger, the Disney CEO, has said that DeSantis and his policies are anti-business. And now, they're showing it. And I think if you look at the backdrop here, DeSantis is used to pushing people around in Florida and not getting a lot of pushback, because he won reelection by a large margin and he has a lot of sway over the legislature.

So people don't really want to cross him. But he finally met somebody who's willing to push back. And it's really making him look small. Disney seems to have a solid legal case with regard to that municipal district DeSantis tried to take over to punish Disney. And let's just remind everybody, this goes-- this dispute actually has nothing to do with business.

It goes back to last year when Disney took a stance against the law that dictates what you're allowed to teach young kids about sex and gender. Disney opposed that because a lot of its employees wanted them to do that. And now, DeSantis has sought retribution against them.

So this is just not going to play well. DeSantis is not actually doing anything that's for the business. He's just taking after businesses for political purposes. And he's going to have to explain this to a much broader audience.

AKIKO FUJITA: Yeah. And that's my followup there, Rick. I mean, it does feel like things have gotten a little personal between the governor and Disney. And if it really is about trying to win those political points, how is this playing within or among potential voters within the party?

RICK NEWMAN: We don't know. I mean, so we know there are polls. The polls show that Donald Trump is actually leading DeSantis by a pretty large margin among Republicans. But I think that Trump is, obviously, famous and well known, DeSantis less well known.

But DeSantis has actually been drooping a little bit in those polls when he should be rising as his donors come together and he develops some momentum. So you know, DeSantis does seem to be vindictive. And he's going to have to either say, yes, that's what-- I behaved that way because that's what I think Republican voters want me to do on these social issues and cultural issues where he's waging his culture war.

Or does he have to moderate that point of view somewhat? But he's kind of stuck here, because he's going to-- he can't really make nice with Disney, I don't think, without losing face. And this legal-- this is now in the courts, and this is going to go on probably well past the 2024 election. So this is going to be dogging him for months.

SEANA SMITH: Ali, what about the investor impact, or lack thereof, that we have seen? Because we have talked about this time and time again-- this ongoing feud. Now they're scrapping a $1 billion plan here in Florida. Yet, we didn't really see it have a big impact on the stock.

ALEXANDRA CANAL: It doesn't. If you take a look at shares, they closed slightly higher. They're trading flat in after hours trading. And you and I have discussed this-- that investors don't really seem to care.

They're shaking off this controversy. When Disney did report earnings, the stock actually tumbled as much as 9%. It was the biggest intraday decline in six months the following day after Disney reported a drop in Disney+ subscribers for their quarter. So that seems to be what investors care about-- the subscriber count and the profitability, not necessarily this ongoing fight with DeSantis.

Now, if this were to incrementally impact revenue or have some sort of direct impact to the parks business, I think that's when you could see investors care a little bit more. But for now, although there seems to be a lot of public interest in the story, from a shareholder perspective, it isn't impacting the stock.

SEANA SMITH: A heck of a lot of public interest in this story. All right, Ali and Rick, great stuff. Thanks so much.

RICK NEWMAN: Bye, guys.