Disney Announces Upcoming Layoffs: In a memo sent to division heads on Friday and seen by CNBC, CEO Bob Chapek said, “We are limiting new hires by putting a targeted hiring freeze in place.” “Hiring will continue for a small number of the most important and business-driving jobs, but all other jobs are on hold. Your team’s segment leaders and HR teams can tell you more about how this will affect them.”
He also said, “As we go through this review process, we will look at every aspect of operations and labor to find ways to save money. As part of this review, we do expect to have to cut some staff.” About 190,000 people work for Disney.
Chapek also told executives that only necessary business trips should be taken. He wrote in the memo that meetings should be held virtually as much as possible.
Disney is also putting together “a cost structure taskforce,” which will be made up of McCarthy, Chapek, and Horacio Gutierrez, who is the general counsel.
Chapek wrote, “I know this will be a hard process for many of you and your teams.” “We’re going to have to make hard and unpleasant choices. But that’s what it takes to be a leader, and I thank you ahead of time for stepping up at this crucial time.”
After a disappointing quarter, Disney decided to make these changes. Shares of the company fell sharply on Wednesday and hit a new 52-week low. Later in the week, however, they began to rise again.
McCarthy said that Disney was looking for ways to cut costs during Tuesday’s earnings call.
“We are actively looking at our cost base and trying to find meaningful ways to save money,” she said. “Some of these will lead to savings in the short term, and others will lead to structural benefits in the long term.”
The move comes after $Dis reported disappointing quarterly results, sending the company’s stock down to a new 52-week low
Disney CEO Bob Chapek sent a memo to division leaders Friday afternoon. https://t.co/Ch0d2i2Ws3
— Susan Li (@SusanLiTV) November 11, 2022
Last quarter, Disney’s streaming services lost $1.47 billion, which was more than double the loss from the same time last year. McCarthy said that the losses will get better in 2023, and Chapek said that streaming will start making money by the end of 2024.
This year, other big media and entertainment companies like Warner Bros. Discovery and Netflix have laid off workers because their stock prices have gone down. Disney hasn’t said anything about plans to cut jobs.
The full memo can be read here:
As we begin fiscal 2023, I want to communicate with you directly about the cost management efforts Christine McCarthy and I referenced on this week’s earnings call. These efforts will help us to both achieve the important goal of reaching profitability for Disney+ in fiscal 2024 and make us a more efficient and nimble company overall. This work is occurring against a backdrop of economic uncertainty that all companies and our industry are contending with.
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. You all will have critical roles to play in this effort, and as senior leaders, I know you will get it done.
To be clear, I am confident in our ability to reach the targets we have set, and in this management team to get us there.
To help guide us on this journey, I have established a cost structure taskforce of executive officers: our CFO, Christine McCarthy and General Counsel, Horacio Gutierrez. Along with me, this team will make the critical big-picture decisions necessary to achieve our objectives.
We are not starting this work from scratch and have already set several next steps—which I wanted you to hear about directly from me.
First, we have undertaken a rigorous review of the company’s content and marketing spend working with our content leaders and their teams. While we will not sacrifice quality or the strength of our unrivaled synergy machine, we must ensure our investments are both efficient and come with tangible benefits to both audiences and the company.
Second, we are limiting headcount additions through a targeted hiring freeze. Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold. Your segment leaders and HR teams have more specific details on how this will apply to your teams.
Third, we are reviewing our SG&A costs and have determined that there is room for improved efficiency—as well as an opportunity to transform the organization to be more nimble. The task force will drive this work in partnership with segment teams to achieve both savings and organizational enhancements. As we work through this evaluation process, we will look at every avenue of operations and labor to find savings, and we do anticipate some staff reductions as part of this review. In the immediate term, business travel should now be limited to essential trips only. In-person work sessions or offsites requiring travel will need advance approval and review from a member of your executive team (i.e., direct report of the segment chairman or corporate executive officer). As much as possible, these meetings should be conducted virtually. Attendance at conferences and other external events will also be restricted and require approvals from a member of your executive team.
Our transformation is designed to ensure we thrive not just today, but well into the future—and you will hear more from our task force in the weeks and months ahead.
I am fully aware this will be a difficult process for many of you and your teams. We are going to have to make tough and uncomfortable decisions. But that is just what leadership requires, and I thank you in advance for stepping up during this important time. Our company has weathered many challenges during our 100-year history, and I have no doubt we will achieve our goals and create a more nimble company better suited to the environment of tomorrow.
Thank you again for your leadership.
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