Iger threatens DeSantis re further investment in Florida

Robert Iger, CEO of The Walt Disney Company (NYSE:DIS), appeared to threaten Gov. Ron DeSantis (R-Fla.) with cancellations of further investment if DeSantis did not cease and desist from what Iger called DeSantis’ “retaliating” against Disney “for taking a position about” the Florida Parental Rights in Education Act.

Bob Iger gives his version

Mr. Iger delivered his threat, and a one-sided commentary on the controversy, in the 2023 Second Quarterly Earnings Call. (Herewith a transcript, courtesy of the investment advisory firm Seeking Alpha Premium.) Specifically he delivered his remarks in answer to a question by Philip Cusick of J. P. Morgan. Mr. Cusick expressed concern that Iger and Disney had a “political issue that only seems to get more press.”

In reply, Iger discussed Florida’s revocation of the special powers and privileges of a number of “special districts,” most notably the Reedy Creek Improvement District, whereon Walt Disney World sits. Iger described DeSantis’ position as “retaliating against us for taking a position about pending legislation.”

The legislation at issue is Florida’s Parental Rights in Education Act. This Act forbade discussion of sexual orientation, gender dysphoria, and the like in K-3 classes. (Florida has since extended that to K-12.) Bob Chapek, Disney’s then CEO, protested the Act as it then stood, at the apparent insistence of Disney “cast.” Subsequent to this, DeSantis introduced legislation to revoke the Reedy Creek Improvement District and revert all governance to Orlando and Osceola Counties.

Eventually Florida settled on substituting a new Central Florida Tourism Oversight District for Reedy Creek. CFTOD has a board that the State appoints; Reedy Creek had a board that Disney appointed. But since returning as CEO, Bob Iger has all but admitted that Reedy Creek is like a glove. And Disney is the hand inside the glove.

The latest pronouncements

Toward the end of his reply to Mr. Cusick, Mr. Iger mentioned that Disney planned to spend $17 billion on further capital development in Florida. Then he asked: “Does the state want us to invest more, employ more people, and pay more taxes, or not?” That appears to be a threat to cancel the development program.

Even before getting to that, Iger asserted the following, beyond his protest of “retaliation”:

1. Reedy Creek is/was one of two thousand special districts throughout Florida.
2. Any benefit Disney had from having a tame special district, Disney has repaid manifold by its own investment and operations.
3. Among other companies “operating a special district,” Iger named Daytona Speedway and The Villages.
4. Disney is a net taxpayer to Florida, so the notion that Disney is “fighting to protect tax breaks” becomes fallacious.
5. No one tried to dismantle Reedy Creek before the controversy over the Parental Rights in Education Act.
6. Disney “created” a “tourism industry” that benefits Florida.

A legal eagle speaks

The YouTube influencer “Legal Mindset” last night released this video saying Iger’s remarks will severely damage the company. Disney has sued DeSantis personally, along with the CFTOD board, in federal court over this controversy.

First, Legal Mindset insists that the only entity against whom Florida has proceeded is Reedy Creek Improvement District. It is not The Walt Disney Company or Walt Disney Parks and Resorts. By conflating Disney with the old RCID, says Legal Mindset, Iger risks liability for securities fraud, with reference to the tax-free general obligation bonds RCID has issued over the fifty years of its operation.

In addition, he makes these points:

1. Those other 2000 special districts lack the powers and privileges of RCID, and rurthermore, most are resident-controlled, not landowner-controlled. And a few of them have State-appointed boards, like the new CFTOD.
2. Any consideration of how Disney benefits Florida does not affect Florida’s inherent power to control a special district. Furthermore, Disney has no more need for such special powers, particularly since it failed to build the city (the original EPCOT concept) that Walt Disney promised before he died.
3. Daytona Speedway has not one controlling stakeholder, but many. And The Villages suffered an adverse IRS ruling concerning their core district. In fact the IRS ordered The Villages to exchange taxable bonds for the tax-free bonds they had earlier issued.
4. Iger accused Florida, without rational basis, of singling RCID out – when in fact a uniform body of law does exist that addresses special districts in Florida.

About the image

The portrait of Bob Iger at the World of Color Premiere Disney California Adventure event on 10 June 2010, is by Josh Hallett. It carries the Creative Commons Attribution/Share-alike 2.0 Generic License.