Disney Sets Layoffs, Targets Hiring Freeze and Limits Travel

Disney will begin enacting layoffs, implement a targeted hiring freeze and limit company travel as part of a sweeping cost-cutting move announced to the leadership Friday.

In the memo obtained by various, which was sent to the top execs Friday afternoon, Disney CEO Bob is tired wrote: “I am well aware that this will be a difficult process for many of you and your team. We will have to make tough and uncomfortable decisions. But that is what leadership needs, and I thank you in advance for stepping up at this important time.” Our company has overcome many challenges during our 100-year history, and I have no doubt that we will achieve our goals and create a more agile company that is better suited to tomorrow’s environment.

Chapek said that Disney will also carry out a “strict review of the company’s content and marketing spending,” with all these efforts overseen by a newly formed “cost structure task” made up of Chapek, CFO Christina McCarthy and general counsel Horacio Gutierrez.

The layoffs and cost cutting news hits four days after Disney presented gross quarterly earnings resultswhich sent the company’s stock tumbling to the lowest price in more than two years.

While the company saw subscriptions for Disney +, which launched its ad-supported levels December 8, significantly exceeding Wall Street’s expectations, Disney reported an operating loss for its streaming segment of $1.47 billion for the quarter that ended October 1, 2022, about $800 million. more than the previous year period. Revenue rose 8% to $4.9 billion, which the company attributed to larger losses at Disney+ and ESPN+ and lower results at Hulu. Meanwhile, revenue for Disney’s linear television network (pay TV and broadcast) fell 5% in the quarter.

Chapek wrote on Friday that this “cost management effort”, which he pointed out himself and McCarthy in the earnings call and “occurs against the background of economic uncertainty” affecting all of Hollywood, “will help us to achieve the important goal. achieve a profit for Disney + in fiscal 2024 and make us a more efficient and agile company overall.

A representative for Disney did not immediately respond Various‘s request for comment.

See Chapek’s memo in full below.

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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