The Walt Disney Company has disclosed that it would not spend close to one billion dollars (£806m) to construct a new corporate campus in the state of Florida.
The reversal comes amid escalating tensions between the entertainment behemoth and Ron DeSantis's Republican-led state government. The proposal called for the relocation of approximately 2,000 employees to a Disney-owned complex in Lake Nona, near Orlando.
The office of Mr. DeSantis described the announcement as "unsurprising." Cancellation was communicated to employees via internal email on Thursday.
The email explained that the company's decision was the result of "considerable changes" since it was initially announced. The president of Disney's theme park division, Josh D'Amaro, also mentioned "changing business conditions" in his email.
Although the email does not mention politics or Mr. DeSantis, it has been interpreted as a reference to the escalating tensions between Disney and Florida lawmakers.
It was almost two years ago that Disney announced that a Lake Nona campus was a possibility. According to a statement released by Mr. DeSantis' office, the initiative never materialized, and the state was uncertain as to whether it would be realized.
It is unsurprising that the company would restructure its business operations and discontinue unsuccessful ventures, given its dire financial situation, falling market valuation, and falling stock price.
The internal Disney email stated that the decision to abandon the project was made following the company's new leadership, referring to former CEO Bob Chapek, whose November resignation stunned Hollywood. The unbuilt Lake Nona campus would have been the new home for Imagineers, the company's secretive theme park research and development arm, who were requested to relocate from California to Florida.
Mr. D'Amaro's email stated that relocation was no longer required and that the company would address next steps with those who had already relocated. Many of the jobs slated for relocation to Florida were higher-paying, white-collar, and technologically-focused positions. According to sources, the endeavor was valued at approximately $867 million, and the average annual salary for the positions was $120,000.
Bob Iger, the former CEO who made a stunning return to replace his successor, Mr. Chapek, has announced broad changes to bolster the company's business, which has been under pressure due to the decline of the traditional film and television industries. Disney launched its streaming service Disney+ in 2019, but it continues to incur losses.
As opposed to other media companies, the profitability of Disney has been protected by the prominence of its theme parks. Since its zenith in March 2021, however, its share price has decreased by half, as investors anticipate a difficult future.
Mr. Iger presented a proposal in January of this year to restructure the operations of the company and eliminate around 7,000 jobs in order to achieve a cost savings goal of $5.5 billion.
A separate announcement on the closure of a Star Wars-themed immersive hotel experience with one hundred rooms was made on Thursday. The experience was located in one of the company's theme parks in Florida.