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Disney plans to freeze hiring and cut jobs

By Nagasunder in US Employment News, posted November 14, 2022

Disney has revealed plans to freeze hiring and lay off some employees.

This is in response to the company's efforts to bring the Disney (DIS)+ streaming service into profitability against a backdrop of economic uncertainty.

The memo was sent to Disney executives by CEO Bob Chapek.

The letter said the company is instituting a targeted hiring freeze and anticipates "some small staff reductions" as it seeks to manage costs.

Chapek wrote: “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."

The move came after Disney missed Wall Street estimates for quarterly earnings on Tuesday, November 8.

This is as the entertainment conglomerate continued to incur losses from its foray into streaming video.

This is referred to as the company's direct-to-consumer (DTC) business.

Following the release of the results, the company's stock dropped more than 13 percent on Wednesday, November 9.

The fast-growing service added 12 million subscribers in its fiscal fourth quarter.

According to Disney, it reported an operating loss of nearly $1.5 billion.

The company said Disney+ would become profitable in 2024, with losses having peaked in the quarter.

The streaming service is known for original series including the “Star Wars” entries “The Mandalorian,” “Andor” and “Obi-Wan Kenobi,” the Marvel entries “WandaVision,” “Hawkeye” and “She-Hulk: Attorney at Law,” and content hubs for Disney, Pixar, Marvel and “Star Wars” films.

Wall Street analysts have expressed concern about Disney's rising streaming costs.

In a note this week, Moffett analyst Michael Nathanson stated, "the company has to prove that their pivot to DTC will be worth the investment price that is currently being paid."

To prepare for an economic downturn, corporate America is laying off thousands of workers.

Meta announced this week that it would cut over 11,000 jobs in order to cut costs.

As the recently merged company restructures its content operations, one of Disney's studio peers, Warner Bros Discovery, has undergone dramatic cost-cutting efforts, including layoffs.

Disney, according to Chapek, has formed a task force that includes Chief Financial Officer Christine McCarthy and General Counsel Horacio Gutierrez to assist him in making "critical big-picture decisions."

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The company has already begun to examine content and marketing spending, but Chapek insists that any cuts will not compromise quality.

Chapek stated that business travel would be limited, with trips requiring advance approval or being conducted virtually as much as possible.

Source: CNN Business

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