Memo shows Disney plans hiring freeze, job cuts | CNN Business

Disney (DIS) plans to freeze hiring and cut some jobs as it strives to move its streaming service Disney (DIS) to profitability on the back of economic uncertainty, according to a note seen by Reuters on Friday.

CEO Bob Chuckle sent the memo to Disney leaders, saying the company is freezing targeted hiring and expecting “some small staff reductions” as it looks to manage costs.

“While some macroeconomic factors are beyond our control, achieving these goals requires all of us to continue to do our part to manage the things we can control — most notably our costs,” Chapek wrote in the note.

The move came after Disney missed Wall Street estimates for quarterly earnings on Tuesday as the entertainment giant took more losses from its rush to live video streaming, which it refers to as a direct-to-consumer (DTC) business. The company’s shares fell more than 13% on Wednesday following its results.

Disney said the fast-growing service added 12 million subscribers in the fourth quarter of the fiscal year, but reported an operating loss of about $1.5 billion. The company said Disney+ will turn a profit in fiscal year 2024, with losses peaking in the quarter.

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

Wall Street analysts are concerned about Disney’s escalating broadcast costs. MoffettNathanson analyst Michael Nathanson noted in a note this week that “the company must prove that its DTC pivot is worth the investment price currently being paid.”

Corporate America is making deep cuts to its employee base to prepare for the economic downturn. Meta said this week it would cut more than 11,000 jobs, or 13% of its workforce, to curb costs.

One of Disney studios’ peers, Warner Bros. Discovery, has undergone dramatic cost-cutting efforts, including layoffs, as the combined company recently restructured its content operations.

Chuckle said Disney has set up a task force, including chief financial officer Kristin McCarthy and general counsel Horacio Gutierrez, to help him make “crucial decisions about the big picture.”

The company has already begun to look at spending on content and marketing, but Tangabe said the cuts won’t sacrifice quality. Entanglement writes that hiring will be limited to a small subset of critical positions, and some staff reductions are expected as the company looks to make itself more cost-efficient.

Shabak said that business trips will be limited and that trips will require prior approval or will be physically conducted as much as possible.

“Our transformation is designed to ensure that we thrive not only today, but in the future,” Cluck wrote.

The memo was first reported by CNBC.

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