Disney vs. Ron DeSantis: A Reality TV-Style Conflict Reveals Disney's Struggles

The conflict between Disney and Ron DeSantis, the next Republican presidential candidate and governor of Florida, is like a reality TV contest. And while Disney has made headlines for its strategic manoeuvring, including most recently cancelling a $1 billion office project near Orlando, this somewhat obscures a less dramatic truth: Disney's company is faltering.

The corporation terminated its Lake Nona office building on Thursday, adding yet another shot to its ongoing exchange with DeSantis. Around 2,000 well-paying jobs would have been moved from California to Florida as a result of the project. The bulk migration is now cancelled, and Disney announced that it would even assist the 200 or so workers who had already moved to return to California if they so desired.

The news can be interpreted in a few different ways. The action is only the latest in a string of attacks by Team Disney against a relatively novice lawmaker who chose the wrong corporate to pick a battle with. If you're a member of Team DeSantis, closing down Lake Nona is a sign of the desperation of a firm whose stock is plummeting and whose core operations are experiencing significant challenges.

Both arguments include some elements of truth.

The project's cancellation by Disney was "unsurprising," according to a DeSantis spokeswoman, "given the company's financial difficulties, declining market cap, and declining stock price."

He is correct. Disney's financial issues, however, are mostly related to its cash-guzzling streaming business and its quickly declining traditional cable TV earnings.

Its streaming division (Disney+, Hulu, and ESPN+) is still not profitable, and in the first quarter of this year, weaker ad revenues caused a 35% decline in operating income from its cable and broadcast networks.

From a financial standpoint, Disney's stalwart safety net, the consistently lucrative parks sector, is still a plus. But fans say they feel nickel-and-dimed and are quite dissatisfied with recent pricing and logistical adjustments. Disney recently cut park rates in response to complaints from visitors, but it didn't exactly solve its problem with a financial shortfall.

"They've made it so, so complicated," said Pete Werner, owner of the travel company Dreams Unlimited Travel and WDWInfo.com, one of Disney's first fan sites. "You need a PhD to plan a Disney World vacation anymore." They have always benefited from the parks and resorts, he claimed. "That could change, and if they don't change the direction of the parks soon, that will change."

These worries appear to be shared by investors. While the S&P 500 has up 2% this year, Disney's stock is down more than 5%. Rivals like CNN parent firm Warner Bros. Discovery (up 28%) and Comcast (up 16%) have soared higher.

The Lake Nona cancellation occurred the same day that Disney said it will close the Galactic Starcruiser, a Star Wars hotel that is only a year old. Fans recoiled at the resort's pricing, which ranged from $4,800 to $6,000 a cabin for a two-night immersion experience. Werner claimed that because of the difficulty in selling at that price point, Disney started to provide reductions in January.

Disney is "almost surgical" with cuts, he claimed, especially in the parks.

Given the significance of the parks to Disney's financial performance, the company wasn't willing to allow one of its expensive resorts to operate at a loss.

Bob Iger, the CEO of Disney, who is returning for a second term in office, has his job cut out for him. He could currently be ahead of DeSantis in the PR war. But it will take more than a top-notch group of well-paid attorneys and communicators to solve Disney's existential concerns.