Bringing this particular war to an end will require both DeSantis and Disney to want peace.
Bringing this particular war to an end will require both DeSantis and Disney to want peace.
T he now-yearlong feud between Ron DeSantis and Disney is, as Jim Geraghty has described it, at least “a five-layer cake” of competing narratives and arguments. We can argue about the merits of Florida’s law against sex and gender instruction of young kids, or about the proper role of corporate political pressure on state government, or about the proper role of state government in rewarding and punishing business along ideological and political lines, or about the unique legal status of Florida’s special districts that give governmental powers to some favored businesses, or, of course, about the political prospects of DeSantis.
Now, as seems inevitable in modern America, that battle has gone to court. On April 26, Disney filed suit in federal court in northern Florida, where its case was predictably assigned to chief judge Mark Walker, who has made a name for himself thanks to his florid hatred of DeSantis and for Walker’s headline-grabbing opinions bashing the governor’s decisions. On May 1, the DeSantis-appointed Central Florida Tourism Oversight District filed its own suit in state court, a much friendlier venue. I’ll get into the legal weeds in a later column.
A writerly confession: I have not written that much directly on this controversy to date, in part because addressing its many layers comprehensively demands thinking through a bunch of important philosophical questions. My editors, however, have taken to reminding me that not every column has to be comprehensive. So, in today’s column, I will walk through the various decision points at which either DeSantis, Disney, or both could have de-escalated a fight that really should have been resolved by now, and consider why they didn’t.
The Kingdom of the Sun
Walt Disney World was planned in the mid 1960s as a bigger, more affordable version of California’s Disneyland, which would be more convenient to the eastern half of the country. Walt Disney, who planned much of the project but died before it broke ground, wanted more land and more control than he’d had in California. Florida, a sleepy backwater for a century after statehood in 1845, was emerging into a new era with the advent of air conditioning and air travel in the 1950s and the end of segregation in the 1960s. But it still had vast areas of undeveloped land.
So, a deal was struck to create the Reedy Creek Improvement District in 1967. Florida law allows for all manner of special districts, providing exemptions from some laws and benefits to the particular businesses within the district. There are more than 1,800 such districts. The Villages, for example, has one, and so do Cape Canaveral, Daytona International Speedway, and Orlando International Airport. But none quite approaches Reedy Creek for its combination of size, impunity, and the consolidation of all governing authority in the hands of a single private company.
The Magic Kingdom is at the heart of something that operates very much like an actual kingdom. It is sometimes described as corporate welfare or a tax break, which is not really accurate. It is more like a libertarian’s idea of paradise, with a private company responsible for virtually every government service and accountable to the marketplace if it fails at the task. Disney has plowed significant resources into providing services and functions normally handled by the government, and on balance, it pays and generates enormous tax revenue to the state.
The arrangement has long had its critics — one author in 2001 called the district a “Vatican with Mouse ears” — irked by the fact that Disney effectively runs the center of the state while operating under different laws from its theme-park and resort competitors in the area. Local authorities have their own grievances over tax disputes. There are surely fair grounds to argue for some reforms. That being said, prior to 2022, the marriage between Disney and Florida was outrageously beneficial for both parties, and nobody in the state capital in Tallahassee thought to disturb it.
When Disney World opened in 1971, the population of Florida was 7.2 million people. The state’s population, which had doubled since 1954, has tripled since then, twice the growth rate of the rest of the country. Per capita income in Florida in 1971 was $4,433. That tripled by the mid 1980s, hit nearly $40,000 before the recession in 2007, and in 2022 reached $63,597. Even in constant, inflation-adjusted dollars, per capita income in Florida has doubled in the past 20 years.
Disney is only one part of that story, but it has been a hugely important one, both materially and symbolically. It is the crown jewel of Florida’s massive tourism industry. In 2019, 131 million people visited Florida, spending nearly $100 billion, supporting 1.6 million jobs and $57 billion in wages and salaries. Those numbers are even higher post-Covid. Even with its small-government budget (half the size of New York’s with a larger population), tourism-related income is a major reason why Florida’s government can afford to do without a state income tax.
Round One: Two Bobs, One Bill
Cinderella’s castle, however, was not fated to preside over a happily ever after story. In early 2022, Florida Republicans introduced the Parental Rights in Education Act, which among other things aimed to restrict sex and gender education in kindergarten through third grade. The bill was wildly popular with Florida parents and Florida voters in general. It was bitterly opposed by national Democrats, national LBGTQIA+ activists, and the national political press (to the extent that these are distinct groups), who mutually agreed to brand it the “Don’t Say Gay” bill.
This put Disney brass in a bind between their customer base and their employees, and also between current and former management. The company’s brand is G-rated, family-friendly entertainment, whether in films, on TV, or at the theme parks. Walt didn’t make sex-ed films for first-graders. CEO Bob Chapek plainly wanted to keep Disney out of the fight, which had nothing whatsoever to do with how the company makes money for its shareholders. But a vocal, militant faction of Disney employees wanted to deploy the company’s economic and cultural power to stop the Parental Rights in Education Act. Worse for Chapek, they were egged on by his predecessor, former CEO Bob Iger, who was denouncing the bill on Twitter.
Chapek, thinking his job was to stand for the company’s interests, refused to budge. He ultimately claimed to Disney’s shareholders that the company was working behind the scenes to defeat the bill in Tallahassee, where Disney rarely lost when it exerted itself. DeSantis, in a recent interview with Bradley Devlin of the American Conservative, said that he heard no word of Disney’s “fleet of lobbyists” working against the bill.
The Parental Rights in Education Act passed, with DeSantis signing it. Conservatives cheered a rare uncomplicated win in the culture wars. His enemies were humbled, frustrated that the most politically powerful company in the state, which was famously gay-friendly, had been unable to stop the bill and was seemingly unwilling even to try.
At this point, DeSantis had no reason to keep fighting; he’d gotten everything he wanted. Neither did Disney, which had no interests at stake in alienating the state government over a horse that had left the barn, and wasn’t even the company’s horse.
Round Two: Who, Whom
Chapek, however, was less secure in his position than DeSantis was, so he fired the first shot. It remains much disputed whether he meant it, and whether DeSantis believed that he meant it or just saw an opportunity to send a message.
What Chapek did, after a groveling apology in a companywide email, was to put out a statement:
Florida’s HB 1557, also known as the ‘Don’t Say Gay’ bill, should never have passed and should never have been signed into law. Our goal as a company is for this law to be repealed by the legislature or struck down in the courts, and we remain committed to supporting the national and state organizations working to achieve that. We are dedicated to standing up for the rights and safety of LGBTQ+ members of the Disney family, as well as the LGBTQ+ community in Florida and across the country.
Chapek may have intended this as an empty virtue signal, and probably hoped that this would be received by his employees and by outside activists as a gesture of submission. But he badly miscalculated how social conservatives would interpret this statement.
What happened next cannot be evaluated outside of the context of twelve years of corporate social-activist bullying of state governments. From Arizona to Indiana to North Carolina to South Dakota to Georgia, left-wing activists perfected the tactic of enlisting major corporations, entertainers, and sports leagues to coordinate economic pressure on state governments to drop or rescind social legislation that was popular with the voters who elected the state government. Rather than use the traditional tools of speech and petition, such as campaign spending, lobbying, and public persuasion, corporations deployed threats of boycotts and economic retaliation, calculating that a big, national enterprise had more muscle than a small to mid-size state. This was particularly effective when the boycotters wielded unique products or services for which they faced no real competition.
They were often proven right, as governors and state legislators often folded in the face of such extortion. Only more recently have governors such as Brian Kemp stood their ground — in Kemp’s case, letting the baseball All-Star Game leave the state over the Georgia voting law. While this weapon was sometimes used on matters of race, immigration, abortion, guns, and voting, it was most commonly featured in battles touching gay and transgender issues and their collision with the rights of families, women, children, and religious believers. It was therefore not unreasonable for Florida conservatives to worry that the national media onslaught over the Parental Rights in Education Act would be followed by something similar, and that Disney might organize or lead it. But the likelihood of this actually happening was probably always slim under Chapek, who was plainly just trying to get the zealots off his back.
Conservatives have been poorly equipped to respond to corporate bullying. Ideologically, the movement has long defended the rights of private enterprise, and in recent years has specifically defended the rights of corporations such as Hobby Lobby to exercise rights of social conscience within their own workplaces. How to handle corporations exercising a veto power on the democratic process itself within that framework was a challenge.
Meanwhile, those same companies were often pushed leftwards by government bodies (including public investors and regulators). And they were rarely themselves champions of unregulated free enterprise. DeSantis is not wrong to notice that Disney — like Apple and Nike — is as quick to accommodate the demands of the Chinese government as it is to hand down its own demands to American states and localities.
DeSantis, possibly sensing an opportunity to send an encouraging signal to frustrated conservatives and at the same time issue a shot across the bow of woke businesses, responded to the Disney statement by doing the previously unthinkable: pushing to strip Disney of its control of Reedy Creek. This was a carefully chosen target. DeSantis wasn’t going after any purely private business interest of the company, or even a government benefit such as a contract or a tax break: He would go after its exercise of government power. He would end Reedy Creek.
It remains to be seen if this works as a legal tactic, but it is at least a more defensible approach as a matter of philosophy: People lose government power over politics all the time. As DeSantis now tells the story, he hadn’t given that much thought before to Reedy Creek (that being a mark of how well it functioned):
“The interesting thing about that is, as governor, I never dealt with Reedy Creek,” DeSantis said. “I had no concept of all they had, because it just never came up. No one ever talked about it. It was never raised with me.”
DeSantis and his team started digging. What they found astonished the governor: “The amount of privileges they have and special treatment was unbelievable. It was unlike anything else we’ve ever seen.”
In late March 2022, DeSantis began publicly floating the idea of taking away Disney’s special privileges. “Because the state should be governed by the best interests of the people, you should not have one organization that is able to dictate policy in all these different realms,” DeSantis said at a March 31, 2022, press conference.
Was this simply a pretext to find a legally and politically justifiable way to punish Disney preemptively in order to deter the company from punishing Florida? Certainly, neither he nor anybody in the legislature had seriously considered this step before the Parental Rights in Education Act fight. Did the fight with Disney just happen to lead DeSantis to discover that Reedy Creek was a boondoggle? Perhaps the truth lies somewhere in between: Having seen the pressure the company was under to use its leverage against the state’s democracy, DeSantis decided that the company’s power needed to be cut down to size lest it be used in the future. Without Reedy Creek, the state would have more of its own levers of influence over the company. What mischief that might create in the hands of politicians was another matter.
DeSantis took a black eye with a lot of principled conservatives over the heavy-handedness of this step, but he nonetheless won this round. Even people (including myself) who doubted the tactics had to admire the effect, which led to a round of corporate retrenching from woke politics for a while. Even as much as Disney remains a beloved brand, the spat also solidified DeSantis’s image as a man unafraid of corporate America, a hard brand for a Republican to build and one that probably helped him romp to reelection in the state.
But there were also looming questions. Reedy Creek was deeply entrenched, and pulling it up by the roots would have all manner of complex consequences for the governance of the region. And there remained the threat that Disney would sue to challenge the loss of its privileges. Even some who were sympathetic to DeSantis warned that he needed a plan to bring the whole episode to a conclusion, lest it become a suppurating wound as he turned his attention to presidential politics.
Round Three: Up the Creek
Aside from free-market and free-speech critiques and political considerations, the other conservative criticism of eliminating Reedy Creek was Burkean: It works, so why try to reinvent it? What DeSantis ultimately did, however, was less a revolution than a coup. Instead of unwinding Reedy Creek entirely and creating something new in its place, he and the legislature left much of its structure intact and simply placed it under new state-run management, the Central Florida Tourism Oversight District, with a board appointed by the governor.
Even so, the list of justifications presented by the board’s chairman for its new powers sounds some ominous notes for fans of small government, including items such as “creating new zoning to develop affordable and work-force housing,” “reducing the carbon footprint created by the district,” “joining the counties’ efforts to create more funding for public schools in Central Florida,” and “evaluating how we can monetize some of the assets of the district to pay off debt.”
Now, it was Disney’s turn to pick a fight when it could have walked away. Significantly, Chapek had by now been replaced by Iger, his predecessor. When Iger took over in late 2022, he made conciliatory noises, saying that he was “sorry to see us get dragged into” the fight with DeSantis. “The state of Florida has been important to us for a long time and we have been very important to the state of Florida.” But Iger was also a big Democratic donor who once entertained thoughts of running for president himself. He was still dealing with the same pressures as Chapek, and more sympathetic to them; Jim Geraghty has described Iger as “more or less the walking embodiment of woke capitalism,” a CEO who “weighed in increasingly loudly and frequently on DACA, gun control, and other political topics.”
If Disney had been blindsided by how DeSantis reacted to its press release on the Parental Rights in Education Act, now it was DeSantis’s turn to be caught by surprise. Just as the legislature was finalizing a complex bill (running nearly 200 pages) to hammer out all the details of the CFTOD, Disney was springing a trap: signing long-term contracts with Reedy Creek in February 2023 that would tie the new board’s hands. It also included some fairly egregious forms of corporate welfare. As Tim Carney has detailed, Disney gave its own pet power company, Reedy Creek Energy Services, the power for the next ten years to set utility rates for all other businesses within the district — even competing hotels operated by Marriott and Hilton.
This was presented to the public as a coup that deprived DeSantis of the fruits of his victory. To pick a representative example, Joe Patrice of Above the Law snarked that “Disney’s Lawyers Are Better Than Ron DeSantis’s Lawyers. . . . The agreements even make the new board get Disney’s permission before trying to do anything!” Meanwhile, Iger became more publicly belligerent, threatening to rethink the company’s plans for $17 billion in investments and 13,000 new jobs in Florida. It certainly looks as if the company is going to do what it can to damage DeSantis politically.
It may regret the escalation. The board, now effectively Disney’s regulator, is visibly incensed. And for reasons of Florida law that I’ll get into in the next installment, its contracts may not prove as ironclad as Disney presented them. That would mean that all of the football-spiking and taunting of DeSantis, the Florida legislature, and the board was for naught, and Disney will be in a much worse position than it was before the contracts.
Even now, it would probably be in the interests of both sides to work out some sort of global settlement. DeSantis has made his point and shown who runs Florida; there are many ways in which a continued war with Disney can do him more harm than good. For Disney’s part, Iger has also shown that he can surprise the governor, but how much shareholder value is he willing to burn in order to pursue a political vendetta? Like it or not, Disney and the CFTOD are going to have to live with one another.
The logic of combat does not always offer easy off-ramps. DeSantis has proven himself a bulldog who won’t back away from a fight. Knowing when to make a deal to lock in your winnings is an important skill, too. But as we often see in conflicts, whether it be Russia vs. Ukraine or Fox vs. Dominion, it takes one to make war, and two to make peace. Bringing this particular war to an end will require both DeSantis and Disney to want peace.