Walt Disney Co. has ended two major investments in Florida amid a high-profile dispute with state lawmakers and Gov. Ron DeSantis.
The company is reversing course on a nearly $900 million investment in a new corporate campus in Florida that would have relocated more than 2,000 employees, mostly from its theme parks division, to the town of Lake Nona, outside Orlando.
Separately, Disney is also closing its Galactic Starcruiser experience at Walt Disney World, one of the company's most expensive attractions where visitors are immersed completely in a "Star Wars" adventure for days. Disney didn't respond to questions about what date it might close.
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Josh D'Amaro, head of Disney's Parks, Experiences and Products division since 2020, said the Lake Nona project is dead. In an email to employees Thursday, employees will no longer be asked to relocate from Southern California.
Hundreds of employees from the division have already relocated to Florida, and will be given the option of moving back, according to people familiar with the matter. The Lake Nona initiative, which contemplated a capital investment by Disney of up to $864 million, was the brainchild of former Chief Executive Bob Chapek, who was fired by the board in November and replaced by Robert Iger, who had previously served as CEO from 2005 to 2020.
"While some were excited about the new campus, I know that this decision and the circumstances surrounding it have been difficult for others," D'Amaro wrote. "Given the considerable changes that have occurred since the announcement of this project, including new leadership and changing business conditions, we have decided not to move forward."
The changing business conditions include both job cuts and growing tensions with Florida lawmakers and the state's governor, according to people familiar with the matter. Disney is in the midst of reducing head count by 7,000 and slashing $5.5 billion from content and administrative budgets.
The company also is embroiled in a war of words and a legal battle with DeSantis, who last year criticized Disney for publicly opposing a sex-education bill that he had championed.
In April, the governor sought to take control of Reedy Creek, a special tax district that allows Disney to essentially self-govern the land that includes its theme parks and hotels near Orlando by replacing the district's board with a handpicked slate of allies and seeking to cancel a 30-year development agreement that Disney had struck in February.
The moves prompted a federal lawsuit from Disney. At Disney's annual meeting in early April, Iger announced that the company plans to invest $17 billion in Florida over the next decade and create 13,000 new jobs, and called DeSantis' attacks on the company "antibusiness" and "anti-Florida."
The cancellation of the Lake Nona project comes as local government and tourism officials in Orange County, Fla., have been touting the project as an important driver of investment and job growth.
Danielle Hollander, chief marketing officer at Visit Orlando, the city's official tourism association, in an interview Monday cited the project as evidence of Disney's commitment to Central Florida alongside other projects, including the debut of a new roller coaster at Magic Kingdom theme park and new attractions being built at nearby Epcot park.
Orange County Mayor Jerry Demings told the Journal on Monday that he believed Disney is "too big to want to fail in Central Florida."
"They want to certainly see a state of Florida that is supportive of their investment," said Demings.
Disney had struck an agreement with Florida officials that could give the company $570 million in tax breaks over a period of 20 years following the construction of its new campus in Lake Nona.
Those incentives were contingent on Disney bringing high-paying jobs to the region. The Orlando Economic Partnership had estimated that the average salary of the positions Disney was relocating to Florida at $120,000 a year.
The jobs set to move from California included hundreds of Imagineers, the team of green beret engineers and designers that was created by Walt Disney himself to design theme-park rides and other attractions, but also thousands of support staff in technology, marketing, communication and finance roles, according to people familiar with the matter.
When the relocation plan was announced in 2021, it caused an uproar among the parks division's employees in California. Members of the relocating group called on company leaders to speak out against Florida legislation limiting classroom discussion of gender and sexuality. After then-CEO Chapek criticized the bill, DeSantis called the company a "woke" corporation, escalating the tension between the two sides.
In a November town hall meeting with staffers a week after returning as CEO, Iger said he would revisit the relocation plan.
"This was not an easy decision to make, but I believe it is the right one," D'Amaro wrote in the email Thursday. "We are committed to handling this change with care and compassion. I remain optimistic about the direction of our Walt Disney World business. We have plans to invest $17 billion and create 13,000 jobs over the next 10 years. I hope we're able to do so."
Write to Robbie Whelan at robbie.whelan@wsj.com and Jacob Passy at jacob.passy@wsj.com