In Time for the Holidays, Disney Plots Layoffs, Slashes Travel Perks

A Friday memo from Disney CEO Bob Chapek promises firings and other belt-tightening measures after a grim Q3
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The Mouse House is about to get an unfortunate bit cozier as Disney CEO Bob Chapek informed top brass on Friday to expect a round of layoffs following a poor third quarter. Chapek did not indicate how many employees will be let go, or when he intends to give them the devastating news, but the number was apparently high enough to warrant a mass email, so it’s likely that a significant number of workers are in for a Thanksgiving surprise they will remember for the rest of their lives.

It’s part of company-wide cost-cutting plans, Chapek said in an email addressed to all executives at the senior vice president level or above. “I am fully aware this will be a difficult process for many of you and your teams,” Chapek wrote. “We are going to have to make tough and uncomfortable decisions.”

In the memo, Chapek volunteered only that Disney does “anticipate some staff reductions as part of this review.” Following the termination of that untold number of Disney’s current 190,000-person workforce, there will also be a “targeted” hiring freeze for all but critical roles at the entertainment giant.

Additionally, Chapek let it be known that the ultimate perk of unchecked business travel now officially belongs to a bygone ere, and from here on in will be limited to the “essential,” with virtual meetings highly encouraged.

No further details were given about the layoffs.

Last week, Disney reported weak Q3 earnings with a $1.5 billion quarterly loss at its streaming business, Disney+, causing stocks to hit a two-year low.

Chapek mentioned in the memo “the important goal of reaching profitability for Disney+ in fiscal 2024,” a recently recurring theme with him.

“Our company has weathered many challenges during our 100-year history, and I have no doubt we will achieve our goals and create a more nimble company better suited to the environment of tomorrow,” he wrote.

Disney joins a group of media and entertainment companies exacting austerity measures. Warner Bros Discovery has made several rounds of cuts totaling nearly $2.5 billion, including binning Batgirl.  Meta’s laid off 11,000 workers last week. Elon Musk laid off nearly half of Twitter’s workforce last Friday, days after his takeover deal went through. Snap cut 20 percent of its staff in late August.

Meanwhile, last month, positive news on the culture war front: there seemed to be a possible detante reached between (newly re-elected) Florida governor Ron DeSantis, who was hell-bent on stripping Disney of its special tax district, and the Mouse House itself.

Full memo via Deadline:

Disney Leaders-

As we begin fiscal 2023, I want to communicate with you directly about the cost management efforts Christine McCarthy and I referenced on this week’s earnings call. These efforts will help us to both achieve the important goal of reaching profitability for Disney+ in fiscal 2024 and make us a more efficient and nimble company overall. This work is occurring against a backdrop of economic uncertainty that all companies and our industry are contending with.

While certain macroeconomic factors are out of our control, meeting these goals requires all of us to continue doing our part to manage the things we can control—most notably, our costs. You all will have critical roles to play in this effort, and as senior leaders, I know you will get it done.

To be clear, I am confident in our ability to reach the targets we have set, and in this management team to get us there.

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

We are not starting this work from scratch and have already set several next steps—which I wanted you to hear about directly from me.

First, we have undertaken a rigorous review of the company’s content and marketing spending working with our content leaders and their teams. While we will not sacrifice quality or the strength of our unrivaled synergy machine, we must ensure our investments are both efficient and come with tangible benefits to both audiences and the company.

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

Third, we are reviewing our SG&A costs and have determined that there is room for improved efficiency—as well as an opportunity to transform the organization to be more nimble. The taskforce will drive this work in partnership with segment teams to achieve both savings and organizational enhancements. As we work through this evaluation process, we will look at every avenue of operations and labor to find savings, and we do anticipate some staff reductions as part of this review. In the immediate term, business travel should now be limited to essential trips only. In-person work sessions or offsites requiring travel will need advance approval and review from a member of your executive team (i.e., direct report of the segment chairman or corporate executive officer). As much as possible, these meetings should be conducted virtually. Attendance at conferences and other external events will also be restricted and require approvals from a member of your executive team.

Our transformation is designed to ensure we thrive not just today, but well into the future—and you will hear more from our taskforce in the weeks and months ahead.

I am fully aware this will be a difficult process for many of you and your teams. We are going to have to make tough and uncomfortable decisions. But that is just what leadership requires, and I thank you in advance for stepping up during this important time. Our company has weathered many challenges during our 100-year history, and I have no doubt we will achieve our goals and create a more nimble company better suited to the environment of tomorrow.

Thank you again for your leadership.

-Bob


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