Disney plans a targeted hiring freeze as well as some job cuts, according to an internal memo sent to executives.
“We are limiting headcount growth through a targeted hiring freeze,” CEO Bob Chapek said in a memo to business unit heads sent out Friday and made available to CNBC. “Recruitment for the small subset of the most critical, business-enabling positions will continue, but all other roles will be suspended. Your segment leaders and HR teams have more specific information on how this will apply to your teams.”
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He added, “As we go through this evaluation process, we will review all operational and job opportunities to find savings, and we anticipate some staff reductions as part of this review.” Disney has approximately 190,000 employees.
Chapek also told executives that business travel should be limited to essential travel only. Meetings should be conducted virtually as much as possible, he wrote in the memo.
Disney is also establishing “a cost structure task force” to be composed 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,” Chapek wrote. “We will have to make difficult and uncomfortable decisions. But that is exactly what leadership requires and I thank you in advance for stepping up at this important time.”
The moves come after Disney reported disappointing quarterly figures. The company’s shares fell sharply on Wednesday, hitting a fresh 52-week low before recovering later in the week.
McCarthy said during Disney’s earnings call Tuesday that the company was looking at ways to cut costs.
“We are currently actively evaluating our cost base and looking for meaningful efficiencies,” she said. “Some of these will bring near-term savings, while others will bring longer-term structural benefits.”
Disney streaming services lost $1.47 billion last quarter, more than double the unit’s loss from a year earlier. McCarthy said losses will improve in 2023 and Chapek has promised streaming will become profitable by the end of 2024.
The full memo can be read here:
As fiscal 2023 begins, I would like to speak to you directly about Christine McCarthy and I’s cost management efforts that I referenced on this week’s earnings call. These efforts will help us both meet our important goal of achieving Disney+ profitability in fiscal 2024, and make us a more efficient and agile business overall. This work is taking place against a backdrop of economic uncertainty that all businesses 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 – particularly our costs. You will all play a critical role in this effort, and as senior leaders, I know you will succeed.
To be clear, I am confident that we can achieve the goals we have set ourselves and that this management team will get us there.
To guide us on this journey, I have established a cost structure task force of senior executives: our CFO, Christine McCarthy, and General Counsel, Horacio Gutierrez. Together with me, this team will make the critical overall decisions needed to achieve our goals.
We are not starting this work from scratch and have already taken several next steps – which I wanted you to hear directly from me.
First, we undertook a rigorous review of the company’s content and marketing spend in collaboration with our content leaders and their teams. While we will not sacrifice the quality or strength of our unrivaled synergy engine, we must ensure our investments are both efficient and deliver tangible benefits to audiences and the business.
Secondly, we are limiting the increase in personnel through a targeted hiring freeze. Recruitment for the small subset of the most critical, business-enabling positions will continue, but all other roles will be suspended. Your segment leaders and HR teams have more specific information on how this will apply to your teams.
Third, we are reviewing our SG&A costs and have found that there is room for improved efficiency – as well as an opportunity to make the organization more flexible. The task force will drive this work in partnership with the segment teams to drive both savings and organizational improvements. As we go through this assessment process, we will review all operational and job opportunities to find savings and we anticipate some staff reductions as part of this review. In the short term, business trips should only be limited to trips that are absolutely necessary. In-person work sessions or offsites that require travel must be approved and reviewed in advance by a member of your leadership team (ie reporting directly to the segment chair or corporate executive officer). These meetings should be conducted virtually if possible. Attendance at conferences and other external events is also restricted and requires approval from a member of your leadership team.
Our transformation is designed to ensure we thrive not just today, but well into the future – and you’ll be hearing more from our task force in the coming weeks and months.
I am fully aware that this will be a difficult process for many of you and your teams. We will have to make hard and uncomfortable decisions. But that is exactly what leadership requires, and thank you in advance for stepping up at this important time. Our company has overcome many challenges in its 100 year history and I have no doubt that we will achieve our goals and create a more flexible company better suited for tomorrow’s environment.
Thank you again for your guidance.
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