The Walt Disney Company has implemented an immediate hiring freeze and will reduce its head count through job cuts in the coming weeks, according to a memo circulated to some workers on Friday.
The memo, authored by Disney Chief Executive Officer Bob Chapek, follows the company’s quarterly earnings report released earlier in the week, which was a disappointment with institutional investors and drove Disney’s stock price down to a 52-week low.
“I want to communicate with you directly about the cost management efforts [Chief Financial Officer] Christine McCarthy and I referenced on this week’s earnings call,” Chapek wrote in the memo. “These efforts will help us to both achieve the important goal of reaching profitability for Disney Plus 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,” Chapek continued. “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.”
Disney is the new Netflix. In an effort to grow, they green-lit too much — and now they're asking customers to cover the cost by implementing Netflix-like price hikes.
This is only going to get worse until Disney realizes they shouldn't follow Netflix's playbook. $DIS
— Matthew Keys (@MatthewKeysLive) November 11, 2022
Chapek said he organized a “cost structure taskforce” comprised of company executives who are tasked with reducing expenses across the board. That task force includes McCarthy as well as Disney’s general counsel, Horacio Gutierrez.
The first step was to take a “rigorous review of the company’s content and marketing expenses,” which Chapek and the team did this week. “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,” he affirmed.
It wasn’t immediately clear which sectors at Disney would be prioritized for investment and marketing going forward. In addition to Disney’s three direct-to-consumer streaming services — Disney Plus, Hulu and ESPN Plus — the company also operates a broadcast network (ABC), several pay television channels (FX, Freeform, the Disney Channel, National Geographic Channel and an 80 percent stake in ESPN), theme parks and a major motion picture studio that includes Pixar Animation.
Chapek said the second step was to limit the number of employees the company had by implementing an immediate hiring freeze across most of Disney. “Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold,” Chapek affirmed to Disney employees. “Your segment leaders and HR teams have more specific details on how this will apply to your teams.”
Disney has around 190,000 employees. It wasn’t clear from the memo how many of those workers were being targeted for job cuts.
“Third, we are reviewing our [selling, general and administrative] costs and have determined that there is room for improved efficiency, as well as an opportunity to transform the organization to be more nimble,” Chapek continued. “The taskforce 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.”
No layoffs or job losses are imminent, according to Chapek’s memo, but managers and other workers have been ordered to limit business travel to “essential trips only” and conduct the majority of meetings remotely, when practical.
“In-person work sessions or offsites requiring travel will need advance approval and review from a member of your executive team,” Chapek said. “As much as possible, these meetings should be conducted virtually.”
Disney staffers will also not be able to appear at conferences unless that attendance has prior approval from an executive, Chapek affirmed.
“Our transformation is designed to ensure we thrive not just today, but well into the future,” Chapek wrote. “You will hear more from our taskforce in the weeks and months ahead.”
On Tuesday, Disney said it brought in $12.7 billion in revenue from its media and entertainment sector — which includes streaming, film, broadcast and cable networks — during its most-recent financial quarter, which didn’t meet the $13.9 billion Wall Street was expecting. Executives said media revenue was offet by higher content production, acquisition and marketing costs.
Disney Plus, the company’s flagship streaming product, grew to 164.2 million customers. Its general entertainment streamer, Hulu, grew to over 44 million customers across its two product categories. ESPN Plus, which focuses mainly on sports, reported 24.3 million subscribers and was the company’s fastest-growing streaming service.
The company plans to increase the cost of its Disney Plus and Hulu services in December.