Disney opens up about cost cuts, hiring freeze and layoffs in memo
Chief Executive Bob Chapek states in a memo that Disney is instituting a targeted hiring freeze and anticipates "some small staff reductions" as it looks to manage costs.
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Walt Disney Co Chief Executive Bob Chapek made an announcement on Friday via a memo addressed to all executives at the senior vice president level or above. The company is planning to freeze hiring and layoffs are likely as part of its cost-cutting measures, stated the internal memo viewed by several publications.
The move is being made to get the Disney+ streaming service to profitability against a backdrop of economic uncertainty. The strict measures come days after Disney reported a $1.5 billion quarterly loss in its streaming business. Shares of the company also fell more than 13% on Wednesday following its results.
In the memo, Chapek said a task force has been instituted to review marketing, content and administrative spending across the entire company and recommend cuts. The team is led by finance chief Christine McCarthy and general counsel Horacio Gutierrez.
“I’m fully aware this will be a difficult process for many of you and your teams,” Mr Chapek said in the memo. “We are going to have to make tough and uncomfortable decisions.”
“While certain macroeconomic factors are out of our control, meeting these goals requires all of us to continue doing our part to manage the things we can control – most notably, our costs,” Chapek added.
The streaming service is known for original series including the 'Star Wars' entries 'The Mandalorian', 'Andor' and 'Obi-Wan Kenobi', the Marvel entries 'WandaVision', 'Hawkeye' and 'She-Hulk: Attorney at Law', and content hubs for Disney, Pixar, Marvel and 'Star Wars' films.
Wall Street analysts voiced concern about Disney’s escalating streaming costs. MoffettNathanson analyst Michael Nathanson observed in a note this week that “the company has to prove that their pivot to DTC will be worth the investment price that is currently being paid.”
Corporate America is making deep cuts to its employee base to brace for an economic downturn. Meta Platforms said this week it would cut more than 11,000 jobs, or 13% of its workforce to rein in costs.
One of Disney’s studio peers, Warner Bros Discovery, has undergone dramatic cost-cutting efforts, including layoffs, as the recently merged company restructures its content operations.
Chapek said Disney has established a task force, including Chief Financial Officer Christine McCarthy and General Counsel Horacio Gutierrez, to help him make “critical big-picture decisions.”
The company already has begun looking at content and marketing spending, but Chapek said the cuts would not sacrifice quality. Hiring will be limited to a small subset of critical positions, and some staff reductions are anticipated, as the company looks to make itself more cost-efficient, Chapek wrote.
Chapek said business travel would be limited and trips would require advance approval, or be conducted virtually as much as possible.
“Our transformation is designed to ensure we thrive not just today, but well into the future,” Chapek wrote.
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