Disney plans targeted employee freezes and job cuts, according to a memo from CEO Bob Chapek
Disney plans to impose a targeted staff freeze, as well as some job cuts, according to an internal memo sent to executives.
“We are limiting staff growth through a targeted workforce freeze,” CEO Bob Chapek said in a memo to division leads sent Friday and obtained by TBEN. “Hiring the small subset of the most critical, business-defining roles will continue, but all other roles are on hold. Your segment leaders and HR teams will have more specific details about how this applies to your teams.”
Chapek also told executives that business travel should be limited to essential travel. Meetings should take place virtually as much as possible, he writes in the memo.
Disney is also establishing a “cost structure task force” consisting of Chief Financial Officer Christine McCarthy, General Counsel Horacio Gutierrez and Chapek.
“I am fully aware that this will be a difficult process for many of you and your teams,” Chapek wrote. “We will have to make difficult and uncomfortable decisions. But that is exactly what leadership requires, and I thank you in advance for your efforts at this important time.”
The moves come after Disney reported disappointing quarterly results. Shares of the company fell sharply on Wednesday, reaching a new 52-week low before rebounding later in the week.
McCarthy said during Disney’s earnings call on Tuesday that the company was looking for ways to cut costs.
“We are currently actively evaluating our cost base and looking for meaningful efficiencies,” she said. “Some of those will bring savings in the short term, and others will bring structural benefits in the longer term.”
Disney’s streaming services lost $1.47 billion in the quarter, more than double the unit’s loss a year earlier. McCarthy said losses will improve in 2023 and Chapek has promised streaming will become profitable by the end of 2024.
Other major media and entertainment companies including: Warner Bros. Discovery and Netflix, have cut jobs this year as valuations have fallen. Disney has not announced any plans to cut jobs.
As we begin fiscal 2023, I want to communicate directly with you about the cost containment efforts that Christine McCarthy and I mentioned in this week’s earnings call. These efforts will help us both achieve the important goal of achieving profitability for Disney+ in fiscal 2024, and make us a more efficient and agile company overall. This work takes place against a background of economic uncertainty that affects all businesses and our industry.
While we have no control over certain macroeconomic factors, in order to achieve these goals, we all need to continue to do our part to manage the things we can control, especially our costs. You will all play a vital role in this effort, and as senior leaders I know you will make it happen.
To be clear, I’m confident in our ability to achieve the goals we’ve set, and in this management team to get us there.
To help us on this journey, I’ve established a cost structure task force of executive officers: our CFO, Christine McCarthy, and General Counsel, Horacio Gutierrez. Together with me, this team will make the critical decisions needed to achieve our goals.
We are not starting this work from scratch and have already taken several next steps – which I wanted you to hear directly from me.
First, we thoroughly reviewed the company’s content and marketing spend in collaboration with our content leaders and their teams. While we will not sacrifice the quality or strength of our unparalleled synergy engine, we must ensure that our investments are both efficient and deliver tangible benefits to both the public and the business.
Secondly, we limit the expansion of the workforce through a targeted freeze of personnel. Hiring for the small subset of the most critical business functions will continue, but all other positions are on hold. Your segment leaders and HR teams have more specific details about how this applies to your teams.
Third, we are reviewing our SG&A costs and identified room for improved efficiency, as well as an opportunity to transform the organization to become more agile. The task force will drive this work in conjunction with segment teams to drive both savings and organizational improvements. As we go through this review process, we’ll be looking at every potential operation and labor to find savings, and we anticipate some staff reductions as part of this review. In the short term, business travel should now be limited to essential travel only. In-person work sessions or remote locations that require travel require prior approval and review from a member of your executive team (ie, direct report from the segment president or corporate executive officer). These meetings should take place virtually as much as possible. Participation in conferences and other outside events is also limited and requires approval from a member of your executive team.
Our transformation is designed to ensure we thrive not just today, but in the future – and you’ll be hearing more from our task force in the weeks and months to come.
I am fully aware that this will be a difficult process for many of you and your teams. We will have to make difficult and uncomfortable decisions. But that is exactly what leadership requires, and I thank you in advance for your efforts at this important time. Our company has endured many challenges in our 100-year history and I have no doubt that we will achieve our goals and create a more agile company better suited to tomorrow’s environment.
Thanks again for your leadership.