Disney Plans Layoffs and Hiring Freeze After Weak Q4

Following last week's fourth-quarter earnings announcement, Disney leaders are planning layoffs, a hiring freeze, and will limit employee travel as part of a cost-cutting effort. It is not yet clear how many jobs the company intends to cut or in which parts of the company the layoffs will take place.

The announcement comes just four days after an underwhelming Q4 earnings call in which CEO Bob Chapek explained the loss of DtoC streaming, the grim outlook for the company's linear channels, and growth prospects for 2023. CEO Chapek and CFO Christina McCarthy hinted at the possibility of budget cuts during the conference call.

On Friday, CEO Chapek outlined the first steps to do so. The CEO sent a memo to executives explaining that layoffs and hiring freezes would be implemented, that employees would be asked to reduce travel, and that content and marketing expenses would be reviewed. These actions will be overseen by a new "Cost Structure Task Force" that includes Chapek, McCarthy, and General Counsel Horacio Gutierrez.

According to Chapek, the cuts will help Disney "achieve its goals and create a more agile company better suited to tomorrow's environment."

The full text of Chapek's memo, published by Variety, can be viewed below.

Disney Leaders-

As we enter FY2023, I want to share directly with you the cost control efforts that Christine McCarthy and I mentioned in our earnings call this week. These efforts are designed to help us achieve our important goal of achieving profitability for Disney+ in FY 2024 and to make us a more efficient and agile company as a whole. This effort is taking place against a backdrop of economic uncertainty facing all businesses and our industry.

Certain macroeconomic factors are not within our control, but in order to achieve these goals, we all need to continue to do our part to manage what we can control, especially costs. You will play a critical role in this effort, and as your senior leader, I am confident that you will get it done.

To be clear, I am confident in our ability to achieve the goals we have set and in this management team to achieve them.

To help guide us on this journey, I have established a Cost Structure Task Force of executive officers. This team will work with me to make the critical big picture decisions necessary to achieve our goals.

We are not starting this work from scratch; we have already set some next steps.

First, we worked with our content leader and his team to conduct a rigorous review of the company's content and marketing spend. We will not sacrifice quality or the strength of our unrivaled synergy machine, but we must ensure that our investments are efficient and provide tangible benefits to both our audience and the company.

Second, we are limiting our headcount growth through a targeted hiring freeze. We will continue to hire for a small percentage of the most critical, business-driven positions, but all other duties will be put on hold. Please contact your segment leader and HR team for specific instructions on how to apply this to your teams.

Third, we are reviewing SG&A expenses and have identified room for efficiency improvements. The task force will work with the segment teams to facilitate this work to achieve both cost savings and organizational strengthening. As we move forward with this evaluation process, we intend to examine all avenues of operations and labor to identify savings, and we anticipate some attrition as part of this review. For the time being, travel should be limited to essential travel only. Direct work sessions or offsites that require travel must be approved and reviewed in advance by a member of the executive team (i.e., the segment chairperson or the Corporate Executive Officer's direct reports). Whenever possible, these meetings should be conducted virtually. Attendance at meetings and other external events is also restricted and must be approved by a member of the Executive Team.

Our transformation is designed to help us thrive not only now, but also in the future.

I am fully aware that this will be a difficult process for many of you and your teams. We will have to make tough and uncomfortable decisions. But that is what leadership requires, and I thank you in advance for standing up at this critical time. We have overcome many challenges in our 100-year history, and I have no doubt that we will achieve our goals and create a more nimble company, better suited to tomorrow's environment.

Thank you again for your leadership and I look forward to working with you in the years to come.