Disney plans a targeted hiring freeze and some job cuts, according to an internal memo to executives.
“We are limiting headcount additions with a targeted hiring freeze,” CEO Bob Chapek said in a memo to division heads sent Friday and obtained by CNBC. “Hiring will continue for a small subset of the most critical, business-driving roles, but all other roles are on hold. Your segment leaders and HR teams have more specific detail on how this applies to your teams.”
Čapek also told the leaders that business trips should be limited to essential trips only. He wrote in the memo that meetings should be held virtually as much as possible.
Disney is also creating 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,” Capek wrote. “We will have to make tough and uncomfortable decisions. But this is exactly what leadership is called for, and I thank you in advance for stepping up at this critical time.”
The moves come after Disney reported disappointing quarterly results. The company’s shares fell sharply on Wednesday, hitting a 52-week low before rebounding later in the week.
McCarthy said during Disney’s earnings call Tuesday that the company is looking for ways to cut costs.
“We are currently actively evaluating our cost base and seeking meaningful efficiencies,” he said. “Some of these will provide near-term savings, while others will provide longer-term structural benefits.”
Disney’s streaming services lost $1.47 billion last quarter, more than double from a year earlier. McCarthy said losses would improve in 2023, and Čapek promised the stream would be profitable by the end of 2024.
Other major media and entertainment companies, including Warner Bros. Discovery and Netflix, they cut jobs this year as valuations fell. Disney has not announced plans to cut jobs.
Disney Leaders –
As we begin fiscal year 2023, Christine McCarthy and I want to connect with you directly about the cost management efforts we are referencing on this week’s earnings call. These efforts will help us both achieve our important goal of achieving profitability for Disney+ in fiscal year 2024 and make us a more efficient and agile company overall. This work comes against a backdrop of economic uncertainty that all companies and our industry are struggling with.
While certain macroeconomic factors are beyond our control, achieving these goals requires that we all continue to do our part to manage the things we can control, especially our spending. All of you will have important roles to play in this effort, and as senior leaders, I know you will.
To be clear, I am confident in our ability to achieve the goals we have set and that this board will get us there.
To guide us on this journey, I have created a cost structure task force consisting of executive officers: Christine McCarthy, our CFO, and Horacio Gutierrez, our general counsel. Along with me, this team will make the critical big picture decisions needed to achieve our goals.
We’re not starting from scratch, and we’ve already set out some next steps – which I wanted you to hear from me directly.
First, we took a hard look at the company’s content and marketing spend with our content leaders and their teams. While we don’t sacrifice quality or the power of our unparalleled synergy engine, we must ensure that our investments are both efficient and deliver tangible benefits for both the audience and the company.
Second, we limit headcount additions through a targeted hiring freeze. Hiring will continue for a small subset of the most critical, business management positions, but all other roles are pending. Your segment leaders and HR teams have more specific detail on how this applies to your teams.
Third, we are reviewing our SG&A expenses and have determined that there is room for efficiency gains as well as an opportunity to make the organization more agile. The task force will conduct this work in collaboration with segment teams to achieve both savings and organizational improvements. As we work through this evaluation process, we will look at every aspect of operations and labor to find savings, and as part of that review, we expect to cut some employees. In the near future, business trips should be limited to essential trips only. In-person work sessions that require travel or at offsite locations will require prior approval and review by a member of your executive team (ie, a direct report to a segment president or corporate executive). Whenever 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 thrive not just today, but into the future, and you’ll be hearing more from our team in the coming weeks and months.
I understand that this will be a difficult process for many of you and your teams. We will have to make difficult and uncomfortable decisions. But this is what leadership requires, and I thank you in advance for stepping up at this critical 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 better suited to tomorrow’s environment.
Thanks again for your guidance.