What I’m Hearing: Iger’s DeSantis Bomb & Majors Questions

Welcome back to What I’m Hearing, coming at you from my flight home from lovely Vancouver, where I spoke at a TED conference dinner for their media partners. Thanks to everyone who had nice things to say about What I’m Hearing and The Town! Reminder: If this email was forwarded to you again, you’re really ready for your own Puck membership, so sign up here. Let’s begin…

Thursday Thoughts…

Netflix is officially boring now: A year after the Great Netflix Correction, the company’s latest earnings report read like a TV conglomerate from a decade ago: Profitable despite slow subscriber growth… focused on growing revenue and free cash flow… vigilantly anti-piracy… bullish on the ad market… and steady in its content spending. Gone are the headlines about high-flying growth and skyrocketing spending—but also gone are the questions about long-term viability. It’s a stabilized, grown-up, kinda boring media company now, the Love Is Blind debacle notwithstanding. At a time when its rivals (like Disney and Warner Bros. Discovery) are in cost-cutting mode, I suppose that staying the course is what passes for exciting these days.
Speaking of Disney cost-cutting: As I mentioned last month, Aziz Ansari and Searchlight were developing Good Fortune, his follow-up to the movie that was supposed to be his directorial debut—until it was scrapped after Bill Murray’s incident with a female crewmember. So how’d the new movie end up announced this week at Lionsgate? The production budget grew to around $25 million, I’m told, which became too rich for Searchlight in Disney’s new era. So Lionsgate swooped in, and Searchlight will retain a small stake in the film for its troubles.
Tough luck for Searchlight: It lost the Ansari project and Magazine Dreams, its big Sundance purchase, stars Jonathan Majors in a performance that Searchlight execs think could generate a best actor Oscar. If Majors doesn’t come back from this domestic violence arrest (he’s denied the claims), it’s 2016 and the Birth of a Nation write-off all over again for Searchlight.
More Majors: Lots of readers have asked me to weigh in on Majors, especially after his reps at Management 360 dropped him (the publicists were already on hiatus). But honestly, the less said about this until the New York D.A. decides what to do, the better. If charges are filed, or more alleged victims come forward on the record, it’s a different conversation. And really, what Marvel decides to do here is all that matters, career-wise. Everything else is speculation.

Yes, it’s hard out there: Universal just passed on the script for the anticipated Paul Greengrass-directed adaptation of Stephen King’s latest novel, Fairy Tale. That’s the same Greengrass who made three massive Bourne movies for Universal, plus United 93, Green Zone and News of the World. And Universal won the project last fall in a bidding war among other studios—studios that will now have a crack at it.

Men of a Certain Age Quiz: Which is the funnier age dodge: Jason Bateman’s character in Air saying “I’m 45” (Bateman’s 54), or Arnold Schwarzenegger being referred to in the Netflix FUBAR trailer as “the fastest 65 year old white guy on the planet”? (Arnold’s 75.) I’m gonna go with Bateman here because his character, Nike executive Rob Strasser, was actually 37 in 1984, when the story takes place. So 45 is probably the youngest age the filmmakers thought he could get away with. Fantastic stuff.
Box office over/under: Evil Dead Rise will probably leverage the Raimi horror brand to beat the $17 million-ish tracking, but I’m more interested in the expansion into 1,000 theaters of Beau Is Afraid, A24’s most expensive movie to date, at $35 million. It’s a tough sell at three hours and is super-weird, a big test of Ari Aster’s fan base.

It May Be Time for Disney to Sue Florida

Iger, an ice-cold killer on his second C.E.O. tour, may need a nuclear option to fend off DeSantis. As the governor and his goons look for new ways to screw with Disney, why not drop the niceties and sue for retaliation?

MATTHEW BELLONI

Lately, Bob Iger seems to have gone Full Michael Corleone at the end of The Godfather, right? Disney’s new/old C.E.O. is cordial and all business up front, while quietly taking people out, often in brutal fashion. Activist investor pest Nelson Peltz? Neutralized. Peltz’s fellow Florida Man Ike Perlmutter, who was somehow still on the Disney payroll? Fired in a humiliating “cost-cutting lay-off,” as if the one-time Marvel C.E.O. were a Dumbo ride operator. Victoria Alonso, a Marvel executive who seemed to prioritize her own personal media profile above the studio’s deteriorating visual effects? Terminated for cause, despite her 17-year tenure and the bad diversity optics, over a contract breach technicality. Ice cold. That’s not even including next week’s massive layoffs, which are said to impact about 15 percent of Disney’s entertainment employees. I talked to another top executive last week who couldn’t understand why Iger, normally so smooth and compassionate when handling uncomfortable situations, announced the 7,000-employee, multi-wave layoff in February, knowing he’d need to wait until now for his division heads and H.R. executives to get their act together so he could really drop the guillotine. It felt to some like Iger was playing to Wall Street analysts, and their desire to see cost reductions announced publicly pronto, rather than to his own employees and their families. The result: Many at Disney have been anxiety-ridden for weeks now, with even department leaders in the dark about the fate of teams they interact with constantly. None of that, however, compares to Iger’s cold manhandling of Don DeSantis—sorry, Ron—the mafioso governor of Florida, who seems intent on letting this stupid culture-war spat sabotage his mainstream credibility, if not his own presidential campaign. DeSantis wrested control of Disney’s special Reedy Creek tax district in response to former C.E.O. Bob Chapek’s position on the “Don’t Say Gay” legislation, until Iger’s lawyers found a totally legit loophole and drove a Main Street Electrical Parade float through it, neutering the DeSantis board by limiting its ability to make big changes without Disney’s approval. DeSantis then extended “Don’t Say Gay” to all grade school students, so Disney invited a huge L.G.B.T.Q. conference to the Florida resort and announced its first official Pride Nights in Anaheim. And back and forth… Just this week, the DeSantis board called out the company’s lack of affordable housing for employees and locals, so Disney immediately countered by announcing plans to build exactly that type of housing. It’s a comical tennis match, made more absurd by DeSantis using Disney—his state’s largest employer—as a foil as he travels the country in support of his as-yet-unofficial presidential campaign. That seems to be not going great, at least if you consider that nearly a dozen of Florida’s Congressional delegation recently endorsed his likely opponent, Donald Trump. And people like Larry Kudlow, on Fox Business, recently said DeSantis is “close to embarrassing himself with his Walt Disney obsession,” as another panelist suggested he’s “anti-capitalism.” But politics aside, I was curious what DeSantis and his cronies on the board of the newly renamed Central Florida Tourism Oversight District could actually do to Disney, and whether all these politically-driven machinations would ever stand up in court. There’s been surprisingly little discussion of that aspect of the fight, probably because when DeSantis bloviates about things like building a state prison next door to Disney World, he tends to dominate the headlines. So I called up Jacob Schumer, a local government and land use attorney at Shepard, Smith, Kohlmyer & Hand, in Orlando. Land use is up there with insurance litigation on the list of least sexy legal practices, but these days Schumer has been getting tons of media calls, and he wrote a piece for Bloomberg last year that accurately predicted DeSantis would have trouble simply dissolving the tax district. There are surprisingly plentiful ways DeSantis and his goons can screw with Disney for years, potentially causing billions of dollars in damage. So many, in fact, that Disney might actually be better served by suing to stop this ridiculousness.

“The Nightmare Scenario”

There’s basically two avenues of potential fuckery here: The Florida legislature and the Oversight District board. The DeSantis-controlled state house and senate are both pushing bills to nullify Disney’s last-minute loophole move, which is preventing the Oversight District board from fully doing DeSantis’s bidding. A bill aimed at restoring those powers, or something similarly targeted, like a planned move to end Disney’s exemption from ride inspections, or an onerous hotel tax on companies with annual revenues above a specific amount, something where only Disney would suffer, could be on the table next. “But here’s the thing: I think Disney would have a very good retaliation case,” Schumer told me. He’s referring to the First Amendment precedent that gives corporations free speech rights, and that the government “retaliating” against a company for expressing itself would violate the U.S. Constitution and case law. That’s why Iger, when he talks about the Florida situation, often uses the retaliation language, noting at the recent Disney shareholder meeting that DeSantis “seems like he’s decided to retaliate against us… In effect, to seek to punish a company for its exercise of a constitutional right. And that just seems really wrong to me.” Efforts like those in Florida might not be retaliatory on their face—the Republican lawmakers rarely mention Disney by name, for instance. But they’re pretty clearly targeted at one company. “I think the 11th Circuit would probably find a way to say that’s retaliation,” Schumer continued, referencing the appeals court that hears Florida cases. Those judges are mostly conservative, but they’re more traditional conservatives who care about things like property rights and the rights of corporations, not the MAGA culture-war types that might back DeSantis. “They would be so offended by what’s been going on,” Schumer predicted. I agree. It’s pretty obvious what the agenda is here, so Disney would likely have the upper hand in a fight over retaliation. But that’s mostly at the state level. Even with the Disney-invoked limitations, the Oversight District board still has pretty broad powers in Disney’s backyard. Just yesterday, the Orlando Sentinel reported, they fired the planning and zoning board and appointed themselves in the role, seeking more power over development. They also suggested raising property taxes. “Local governments have an incredible power to cause pain if the people sitting in the seat don’t want to act in good faith,” Schumer noted. Normally that power is checked because the constituents can vote them out, but not here. “Disney has no power to kick them out other than their indirect power to influence the governor election.” Not great for Disney. The “nightmare scenario,” Schumer said, would be if the government started invoking eminent domain law to capture Disney property for parks, roads, or, yes, a prison with a nightly view of Tinkerbell and the fireworks. “Let’s say the district says we’re gonna use eminent domain to acquire Cinderella’s castle and put a prison in the middle of the Magic Kingdom,” Schumer teased. “They theoretically might be able to do that.” Come on, I responded. If I remember anything from my local government seminar in law school, it’s that eminent domain depends on showing a strong public purpose for taking the land. “True,” Schumer said. “I can’t see a court upholding that as a reasonable use of eminent domain when the use of the land is so productive at Disney World.” But the Oversight District board is still basically allowed to do everything a local government could normally do. And it would be difficult for Disney to claim retaliation in this context without challenging the entirety of the law giving DeSantis control of the board, “which they’ve so far indicated they weren’t going to do.” Why not? This is not a great scenario for Disney. The Kafkaesque nightmare is that Disney, as the only significant occupant of the Oversight District, is paying the tax dollars that are funding this crusade… against Disney. These lawyers aren’t cheap, and DeSantis buddies like David H. Thompson, who has been defending DeSantis moves in court, certainly have no incentive to watch their bills. So why not just drop the niceties here and sue for retaliation? “I think if Disney wants the lawsuit, they would be very strongly positioned to win that,” Schumer predicted. Sure, there would be political fallout, and at this point Disney is winning the battle of public opinion, with DeSantis increasingly coming across as a bully without the brains to back up his threats. So why escalate? The Oversight District can still do things like raise taxes and muck up the company’s plans for a long time, and who knows how desperate and vindictive DeSantis will get. Plus, while DeSantis won’t be around forever, Disney will always be an easy punching bag because its politics take root in Burbank, not central Florida. The only thing that may extricate Disney long term is if the company decides to fight the whole Oversight District takeover, and Iger, with his credibility and stature, might be uniquely positioned to do it while he’s C.E.O. “Disney could sue to say this takeover was retaliatory because, I mean, it definitely was,” Schumer noted. “The governor and legislators have basically said so, and then that becomes a free speech question.” And a great way for Iger, with ice in his veins and the clock ticking on his Disney tenure, to go in for the kill.

See you Sunday, Matt Got a question, comment, complaint, or a eulogy for your Twitter blue check? Email me at Matt@puck.news or call/text me at 310-804-3198.