The Walt Disney Co. is planning to freeze hiring and make staff cuts as it faces a poor financial outlook, according to media reports.
The Burbank entertainment and media giant’s chief executive, Bob Chapek, outlined the company’s plans in a memo sent to “Disney leaders” on Nov. 11 and obtained by CNBC, Reuters and Variety.
In the memo, Chapek said the company’s goals were to make Disney+ profitable in fiscal 2024 and make Disney a more efficient and nimble company overall.
“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,” Chapek wrote in the memo, which was published in full by Variety. “You all will have critical roles to play in this effort, and as senior leaders, I know you will get it done.”
The company has also set up a cost structure task force, consisting of Chapek, Chief Financial Officer Christine McCarthy and General Counsel Horatio Gutierrez, to make “the critical big picture decisions” necessary to achieve its objectives, Chapek’s memo said.
“Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold,” Chapek said in the memo.
The task force was already at work reviewing the company’s content and marketing spending, Chapek added in the memo.
“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,” the memo said.
The task force also reviewed selling, general and administrative costs and has determined there is room for improved efficiency as well as the opportunity to make the company nimbler.
“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,” Chapek said in the memo.
Disney recently missed Wall Street expectations on earnings and revenue for the fourth quarter.
The company reported on Nov. 8 an adjusted net income of $649 million (30 cents a share) for the quarter ending Oct. 1, compared with an adjusted net income of $791 million (37 cents) in the same period a year earlier. Revenue increased from the prior year by 9% to $20.2 billion.
Analysts on average expected earnings of 57 cents on revenue of $21 billion, according to Thomson Financial Network.