Walt Disney Co. plans to implement its biggest hiring freeze, more layoffs and cost cuts in response to its slowing growth, according to a memo from CEO Bob Chapek that was reviewed by The Wall Street Journal on Tuesday. […] According to the memo, the layoffs would affect both full-time and part-time employees and would include Walt Disney Parks and Resorts, which will see a hiring freeze until further notice starting April 11. […] The company also plans to reduce annual operating costs by $300 million starting in fiscal 2019, beginning with a $200 million reduction this fiscal year ending in October.
According to an internal memo sent to executives, Disney plans to execute both a targeted hiring freeze and certain employment reductions.
We are lowering human additions through a targeted hiring freeze, CEO Bob Chapek wrote in a letter to division leaders on Friday. The memo was made available to CNBC. ” All other positions are on hold, with the exception of a small subset of the most critical, business-driven functions. Your sector leaders and HR teams may provide more detailed information on how this will affect your teams.
As part of this examination, “we do expect some employee losses,” he stated, “and as we move through with this evaluation process, we will look at every operational and labour possibility to uncover savings.” At Disney, about 190,000 people are employed.
Executives should only take required business trips, according to Chapek. In the document, he stated that as many meetings as possible ought to be held online.
Additionally, Chapek, Horacio Gutierrez, general counsel, and Christine McCarthy, chief financial officer, will be a part of Disney’s “cost structure taskforce.”
This will be a difficult journey for many of you and your teams, Chapek said. We’ll have to make uneasy, challenging decisions. But that’s exactly what a leader has to do, and I want to thank you in advance for stepping up at this critical time.
The steps were carried out a few days after Disney announced its appalling quarterly profits. The stock of the company dropped significantly on Wednesday, hitting a new 52-week low, before rising later in the week.
McCarthy said during Disney’s earnings call on Tuesday that the company was looking into cost-cutting measures.
We are intensively evaluating our cost base at the moment, and we’re seeking for substantial reductions, the speaker said. While some of these will provide immediate cost savings, others will have longer-term structural benefits.
Disney’s streaming services lost $1.47 billion in the most recent quarter, more than quadrupling their deficit from the same time the year before. By 2023, according to McCarthy’s forecast, losses will start to decline, and by the end of 2024, according to Chapek, streaming will be profitable.
Other significant media and entertainment companies, like Netflix and Warner Bros. Discovery, have reduced staff this year as valuations have plummeted. Disney has not disclosed any plans to reduce employment.