What Can We Learn from DeSantis-Disney Grudge Match?
June 2023
Can it get any uglier? On June 12, visitors to Disney’s Magic Kingdom in Orlando were greeted by a gaggle of protestors waving Nazi flags, with some carrying signs supporting Gov. Ron DeSantis in his well-publicized fight with the company.
It’s not clear who is supposed to have benefitted from this deliberately provocative display. DeSantis can only be tarnished by it. It’s harder and harder, in fact, to figure out who is going to emerge from this struggle looking better than it did before this quarrel started or how, if ever, it will end. The best that can be hoped for at this point, experts say, is that the rest of us — especially those representing other companies taking stands on controversial social issues — might learn something from it.
A few lessons are beginning to suggest themselves, though this of course could change. CNN says the clash “is playing out like a reality TV show,” which isn’t good, and even a seasoned observer like David Demarest admits he continues to be a little mystified by it all. “What continues to surprise me is the extent to which this struggle looks to be a zero-sum game where neither side wins,” says Demarest, now a lecturer in management at the Stanford Business School after 14 years as its vice president of public affairs. Prior to that he held executive leadership positions in communications and external affairs for Bank of America and Visa and was White House communications director under President George H.W. Bush. “The takeaways that seem evident so far are mainly negative ones — what not to do. Of course, by looking at those, we can sometimes figure out what organizations should do when they find themselves in difficult situations like these.”
‘Woke Corporations’?
Disney certainly wasn’t picking a fight when, back in March of 2022, its own employees pushed for the company to take a stronger stand against the Parental Rights in Education legislation, which became widely known as the “Don’t Say Gay” bill. When Disney’s then-CEO Bob Chapek stepped up the opposition, DeSantis responded by saying his administration’s policies would be based on what is best for Florida, “not on the musings of woke corporations.”
The war of words escalated, and in February of this year, the state dissolved the Reedy Creek special district, which, created in 1967, allowed Disney to levy taxes to provide municipal services including power, water, roads and fire protection, effectively developing the 25,000-acre property where Disney World stands. The administration wants to regain control over the district, with DeSantis — who declared his candidacy for the Republican presidential nomination in late May — even suggesting he might build a state prison next to it.
By this time, the battles were fought not only in the media and the legislature but also in the legal system. In April, Disney sued DeSantis and other government officials in federal court, “accusing them of retaliating against the company for engaging in exercising its constitutional rights.” And in May, Disney canceled construction of a $1 billion office complex planned for Orlando.
This decision, which could not have come easily to Disney, was bad news for the state. The Florida Department of Economic Opportunity estimated the project would have brought more than 2,000 jobs to the state, with an average salary of $120,000. The company also said it was reconsidering more than $17 billion in further construction in the state, meaning another 13,000 new jobs lost over the coming decade.
Staying the Course
“Disney deserves high marks for staying the course,” says Brad Figel, formerly senior counsel, corporate public affairs and vice president of public affairs for Mars, Inc., and global director of government affairs for Nike. “The company is a big employer in Florida, with something like 75,000 employees there. So Disney has every right to push for policies that support a diverse workforce, which they have determined to be essential to their business success. Disney has refused to be bullied.”
“Their opposition to the ‘Don’t Say Gay’ legislation seems to me like a natural extension of the company’s long-held values,” says Josh Dare, who worked as a congressional press secretary, director of corporate communications for Sallie Mae and assistant director of the National Endowment for the Arts in Washington before cofounding the Hodges Partnership, a PR firm in Richmond, Va., in 2002.
“Crises reveal your values,” Dare says. “When you make decisions about issues like this based on your values, you’re on solid ground. It is only when you take public positions on controversial issues for what you hope are short-term gains that you get into trouble.” Figel, who is now on the faculty of The Washington Campus, says much the same thing. “Anheuser-Busch in the Bud Light uproar got burned because it didn’t act out of its real values and was seen as backing down,” he says. “Unlike Disney, it folded.”
Financial Straits
None of this could have been easy, given the financial problems the company has been facing. With that in mind, a spokesman for DeSantis dismissed Disney’s decision to cancel the office complex as “unsurprising,” considering its “financial straits, falling market cap and declining stock price.”
Disney has been suffering from what CNN in mid-May called its “money-guzzling streaming business and its rapidly dwindling profit from traditional cable TV.” Its “traditional safety net, the reliably profitable parks division, is still a bright spot from a financial perspective. But fans are deeply unhappy with recent pricing and logistics challenges, saying they feel nickel-and-dimed.” Park prices have been lowered “in response to customer outrage, but that didn’t exactly help its profit crunch problem.”
Disney has even closed down its year-old Galactic Starcruiser hotel, where customers were expected to pay from $4,800 to $6,000 per cabin “for an immersive two-night experience.” Meanwhile, the company has laid off some 7,000 employees, hoping to cut its payroll by $5.5 billion.
‘Winning the PR Battle’?
New (and returning) CEO Bob Iger “may be winning the PR battle at the moment with DeSantis,” CNN concluded. “But the real work — solving Disney’s existential threats — will take more than a crack team of high-paid lawyers and communications professionals to solve.” It is asking a lot, in this political climate, for even the smartest legal minds and cleverest PR strategists to predict how an ambitious politician might behave — especially a governor who wants to expand his base beyond his home state.
There’s not much evidence, so far, that this war is even benefiting DeSantis. He has managed to alienate a lot of mainstream Americans as well as companies and, if the polls are to be believed, he has done so without endearing himself to Trump voters. They still prefer Trump and resent the Florida Republican for daring to run against him.
“Republican governors are traditionally known for their commitment to economic development and their effectiveness at it,” says Council President Doug Pinkham. “Now, by contrast, DeSantis’ actions have resulted in backlash against Florida, which will take an economic hit as a result. During this episode, what DeSantis has done is the opposite of economic development.”
Taking the Heat
The man The Economist calls Ron DeReckless “wants this fight with Disney as a political weapon,” Figel says. “These days, because Washington is so divided, the states get active on these divisive issues. This is true not just of red states but blues ones as well. Governors use these issues to expand their base. Republicans rail against ‘woke’ corporations, and Democrats talk about abortion and gun control. But just because the political winds are crazy doesn’t mean companies shouldn’t get engaged on issues that are central to their business success. They have got to be strategic about these decisions, however, and then prepared to take the heat.”
People in advertising and PR sometimes “want to be provocative — to be part of the cultural conversation — and that can be risky,” Figel says. “From what I can tell, the Budweiser leadership didn’t really know about the Dylan Mulvaney stuff, and it took them more or less by surprise. They appeared to back down, alienating a lot of the customers they had hoped to win over. They weren’t strategic, and they are paying the price for it. That’s what happens when your goal is not deeper than driving sales or being provocative.”
Be Aspirational
Companies that want to take principled stands and avoid finding themselves needing to modify their positions — and face a backlash because of it — might benefit from a more circumspect approach. “We see too many companies these days making bold pronouncements about what a great organization they are, with a courageous commitment to human rights, for example, and then being accused of being hypocritical,” Pinkham says. “They might be better served by framing what they do in aspirational terms. They could say, ‘We want to become a better company, and with great leadership and great employees, working together, we will get there. We will build a better Florida’— or wherever they are operating. That’s a stronger position to take.”
What the DeSantis-Disney grudge match clearly demonstrates, Demarest says, is the need for companies “to be engaging with all of its stakeholders — and not just the ones they think of as friendly or as their allies. It is also important to work systematically to build trust with the ones who might prove hostile or difficult. Even the ones you think of as friends won’t always have the same interests or attitudes, and you have to understand that and prepare for it.
“It isn’t clear how much work Disney put into engaging with the DeSantis administration — or how much the DeSantis administration put into engaging with Disney — before all this exploded. How much work did either of them do to understand the needs and desires of the other?”
Scenario Planning
Disney would have a much stronger case, according to Demarest, “if they could come forward now — or at some earlier stage of this fight — and say, ‘We were working with DeSantis and his people for two years in good faith, for what is best for us, for them, and for the people of Florida, and this is what we get for our efforts?’ That would be a powerful statement to make.”
This episode also underscores the importance of looking at any given challenge from a large enough lens, and for serious scenario planning. “Organizations need to make rational calculations not only how A will likely lead to B,” Demarest says. “That’s not nearly good enough. They also need to dope out how B will lead to C and so on. They need to apply some critical analysis to figure out an end game, and I’m not sure that’s been done in this case.”
Building trust “is hard, and no one should pretend otherwise,” Demarest says. “It is a long-term undertaking and a continuous process. But when it is done, even if things don’t turn out the way you might hope, you will at least be able to explain your actions — and the outcomes — to your stakeholders. But by the same token, the odds that they will turn out in your favor will increase.”
”The best that can be hoped for at this point, experts say, is that the rest of us — especially those representing other companies taking stands on controversial social issues — might learn something from it.
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