Disney plans job cuts and a hiring freeze, CEO Bob Chapek said in a memo

Disney plans to make targeted job freezes as well as some job cuts, according to an internal memo sent to executives.

“We are limiting additional headcount through a targeted hiring freeze,” said CEO Bob Chapek in a memo to division leads sent Friday and obtained by CNBC. “Hiring for a small part of the most critical, business-driving positions will continue, but all other positions are held. Your division leader and the HR team have more specific details on how this will apply to your team.”

He added: “As we work through this evaluation process, we will be looking at every aspect of our operations and workforce to find savings, and we expect some staff reductions as part of this review.” Disney has approximately 190,000 employees.

Chapek also told executives business travel should be limited to essential travel only. The meeting should be held as soon as possible, he wrote in the memo.

Disney also established a “cost structure task” consisting of Chief Financial Officer Christine McCarthy, General Counsel Horacio Gutierrez and Chapek.

“I am fully aware this will be a difficult process for many of you and your team,” Chapek wrote. “We had to make tough and uncomfortable decisions. But that’s what leadership needs, and I thank you in advance for stepping up at this critical time.”

The move came after Disney reported disappointing quarterly results. Shares of the company fell sharply on Wednesday, hitting a new 52-week low, before rebounding later in the week.

McCarthy said during Disney’s earnings call on Tuesday that the company is looking for ways to cut costs.

“We are actively evaluating our current cost base, and we are looking for meaningful efficiencies,” he said. “Some will provide some near-term savings, and others will drive long-term structural benefits.”

Disney’s streaming service lost $ 1.47 billion last quarter, more than double the unit loss from a year earlier. McCarthy said losses will increase in 2023, and Chapek has promised streaming will be profitable by the end of 2024.

Other large media and entertainment companies, incl Warner’s discovery rose and Netflix, has cut jobs this year as valuations have slumped. Disney has not announced plans to cut jobs.

The full memo can be read here:

Disney CEO-

As we begin fiscal 2023, I want to communicate with you directly about Christine McCarthy’s cost management efforts and I refer to this week’s earnings call. This effort will help us achieve our important goal of achieving profitability for Disney+ in fiscal 2024 and make us a more efficient and nimble company overall. This work takes place against the backdrop of economic uncertainty that all our companies and industries face.

Although certain macroeconomic factors are beyond our control, meeting these goals requires all of us to continue to do our part to manage the things we can control—primarily, our costs. You will all have an important role to play in this effort, and as a senior leader, I know you will make it happen.

To be clear, I am confident in our ability to achieve the target we have set, and in this management team to achieve it.

To help us on this journey, I have established a cost structure task force of executive officers: our CFO, Christine McCarthy and General Counsel, Horacio Gutierrez. Along with me, this team will make the critical big picture decisions needed to achieve our goals.

We are not starting this work from scratch and have set some next steps—which I want you to hear directly from me.

First, we have conducted a rigorous review of the company’s content and marketing spending in collaboration with our content leaders and their teams. Although we will not sacrifice the quality or the power of the unparalleled synergy engine, we must ensure that our investment is equally efficient and has real benefits for the audience and the company.

Second, we limit additional headcount through a targeted hiring freeze. Hiring for a small subset of the most critical, business-driving positions will continue, but all other roles are on hold. Your segment leader and HR team have more specific details on how this will apply to your team.

Third, we reviewed our SG&A expenses and have determined that there is room to improve efficiency—and an opportunity to transform the organization into a more agile one. The task force will drive this work in partnership with segment teams to achieve savings and organizational improvements. As we work through this evaluation process, we will look at every aspect of our operations and workforce to find savings, and we expect some staff reductions as part of this review. In direct terms, business travel should now be limited to essential travel only. Personal work sessions or offsites requiring travel will require prior approval and review from a member of your executive team (ie, a direct report from the division chairman or company executive officer). As much as possible, these meetings should be held virtually. Attendance at conferences and other external events will also be restricted and require the approval of a member of your executive team.

Our transformation is designed to ensure we’re moving forward not only today, but into the future—and you’ll be hearing more from our task force in the weeks and months ahead.

I fully realize this will be a difficult process for many of you and your team. We have to make tough and uncomfortable decisions. But that’s what leadership is all about, and I thank you in advance for stepping up at this crucial time. Our company has weathered many challenges during our 100-year history, and I have no doubt that we will achieve our goals and create a company that is more agile and more compatible with the environment of tomorrow.

Thanks again for your leadership.

– Bob

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