Disney Details Plans for Cost Cuts, Layoffs and Hiring Freeze in Memo

Walt Disney Co.

DIS 5.03%

Chief Executive Bob Chapek announced the company’s cost-cutting measures on Friday and told division chiefs that layoffs are likely, according to internal memos seen by The Wall Street Journal.

The measures, which include bans on all essential work travel and halting new hires for all or a few critical situations, come days after Disney reported an annual bankruptcy and a billion-dollar loss. $1.5 billion per quarter in its business, much more. Wall Street analysts predicted.

In the record, which was told to all leaders at the level of president or above, Mr. Chapek said the task force, led by chief financial officer Christine McCarthy and general counsel Horacio Gutierrez, will review marketing, content and administrative expenses across the board. a company that supports turtles.

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“I am well aware that this will be a difficult process for many of you and your team,” Mr. Chapek said in the note. “We have to make tough and tough decisions.”

Mr. Chapek said in the note that in the process of reviewing all of Disney’s finances, the company “will look for any means of work and work to find money.” He added, “we expect some staff reductions as part of this investigation.”

The company did not indicate the number of potential retirees in the note, but said the move should be limited and would require approval from senior officials.

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“I have no doubt that we will achieve our goals and create a beautiful company,” Mr. Chapek said in a note.

Companies across media and technology are announcing rewards and cash-strapping measures as big bets and respect in the metaverse made during the coronavirus pandemic is showing signs of exposure.

Since launching its flagship Disney+ service at the end of 2019, Disney’s streaming business has gained 235 million subscribers worldwide across all of its video channels, including Hulu, ESPN+, the Star service in Europe and Hotstar in Asia. That success transformed Disney in a short period of time into a major player in the streaming world, potentially taking on Netflix. Inc.

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and others compete in many markets around the world.

However, that growth has come at a high cost: Disney’s advertising division has lost more than $8 billion in the past three years. Mr. Chapek insisted for a long time that Disney + will be profitable in 2024 but he reduced his forecast for the number of subscribers to the service. This week, he said that the profit target assumes that there is no meaningful change in the economic situation.

A cafe at Disney’s Epcot theme park in Orlando, Fla., this past summer. The company laid off thousands of workers during the pandemic when its factories were closed.


Photo:

Zack Wittman for The Wall Street Journal

During an earnings call with investors on Tuesday, Ms McCarthy, the chief financial officer, said that Disney would aggressively pursue budget cuts, and that “some of those will provide some cash flows are near and others will drive long-term strategic gains.”

Ms McCarthy also pointed to measures the company has taken in its theme park sector during the Covid-19 pandemic. Then, with the parks closed, the company laid off thousands of workers and began working on new technologies to better manage workers.

Meta Platform Inc.,

The parent company of Facebook, said this week that it will eliminate 11,000 positions after growth in its virtual reality platform was slower than expected.

Warner Bros. Research Inc.,

The owner of Hollywood’s oldest movie theater and streaming service HBOMax has cut more than 1,000 positions as the company struggles to get out from under a heavy debt burden.

Comcast Corp

NBCUniversal is also looking to reduce its headcount and is offering buyouts to employees over the age of 57 who have been with the company for at least 10 years, people familiar with the matter said.

Disney’s stock has fallen about 40% since the start of the year. On Friday, they closed at $95.01 a share, up 5% on the day after earlier this week on the earnings report.

Mr. Chapek has faced challenges since his role as CEO began in February 2020. He managed through the global pandemic that closed the company’s theme parks and cruise line businesses. Activist investor Dan Loeb, who owns Third Point LLC, took a new stake in the company over the summer.

Mr. Loeb called Mr. Chapek has made several changes at Disney, and high on his list is the reduction of energy costs. He also called for the board to be restructured to include more digital media and for Disney to buy minority stakes in Comcast and Hulu. In September, Disney added Carolyn Everson, a technology and media executive, as director, and Mr. Loeb agreed to a break in the company’s structure.

In June, Disney’s board voted to renew Mr. Chapek for another three years. Her health is being watched after she and Florida Governor Ron DeSantis publicly spoke out against Disney – despite pressure from employees and supporters – against parental consent and education, a state law – which has now passed – that restricts the teaching of sex in schools. identity and gender in elementary school.

Write that Robbie Whelan at [email protected]

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