Disney plans to implement a "targeted hiring freeze" and intends to make job cuts. The staff reduction comes as part of its plan to evaluate operations and labour to find savings, CEO Bob Chapek said in an internal memo, according to CNBC.
He added that Disney has also gone through a "rigorous review" of its content and marketing spending together with its content teams. While Disney does not intend to sacrifice quality or the "strength of [its] synergy machine", Chapek said the company needs to ensure that its investments are efficient and have tangible benefits to its audiences as well as the company.
To carry out the review, Chapek has formed a cost structure task force comprising himself, CFO Christine McCarthy, and general counsel Horacio Gutierrez. The team will be responsible for making "critical big picture decisions" which Chapek said are required to achieve its objectives, CNBC said.
The company is also mandating business travel in the immediate term to be limited to essential trips. At the same time, in-person work sessions or offsites requiring travel will now require advance approval and review from a member of the executive team. According to CNBC, it can either be a direct report of the segment chairman or corporate executive officer. These meetings should be carried out virtually as much as possible, Chapek added. At the same time, employees will also require approvals to attend conferences and other external events.
Chapek said that while this is a difficult process for many employees, Disney will be required to make "tough and uncomfortable decisions". According to CNBC, Disney has about 190,000 employees. MARKETING-INTERACTIVE has reached out to Disney for comment.
Disney posted revenue of US$20.15 billion for the fourth quarter of its 2022 financial year. Quoting Refinitiv, CNBC previously reported that this was slightly lower than the US$21.24 billion expected.
The number of Disney+ subscriptions, on the other hand, surpassed expectations and brought the total subscriber base to 164.2 million, which was higher than analysts' estimate of 160.45 million. Meanwhile, Hulu had 47.2 million paid subscribers while ESPN+ had 24.3 million. That said, its losses still in the streaming division grew to US$1.47 billion during the quarter and according to CNBC, this was more than double the loss from a year ago. Disney attributed this to the lack of "premier access" content or theatricallly released films.
Chapek said during the Q4 2022 earnings that it expects DTC operating losses to narrow moving forward and that Disney+ will still achieve profitability in fiscal 2024.
Meanwhile, McCarthy said during the recent earnings call that it is "actively evaluating its cost base currently, and it is looking for meaningful efficiencies". "Some of those are going to provide some near-term savings, and others are going to drive longer-term structural benefits," she added. The impending job cuts at Disney come shortly after other tech firms including Meta, Twitter, Snap, YouTube, and even Netflix have also decided to reduce the size of their workforce.
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