Just days after a poor quarterly earnings report, a memo from Walt Disney CEO Bob Chapek to senior executives announced a “cost structure” plan -- including layoffs and a hiring freeze.
Chapek sent the memo on Friday afternoon saying the company is establishing a cost structure “taskforce” to be made up of Christine McCarthy, chief financial officer; Horacio Gutierrez, general counsel, and Chapek.
Chapek said in the memo: “We do anticipate some staff reductions as part of this review.”
The memo comes after Disney's weak quarterly earnings report where steeper losses took place at its crucial direct-to-consumer business -- $1.4 billion in net losses, more than double the $630 million in losses in the third quarter of 2021.
Higher losses at Disney+ and a decrease in profitability at Hulu were the major reasons. The latter was a result of higher programming, production and marketing costs, the company said.
“We are going to have to make tough and uncomfortable decisions,” writes Chapek in the memo. “But that is just what leadership requires, and I thank you in advance for stepping up during this important time.”
McCarthy tipped off the possibility of trimming costs in Tuesday's earnings phone call: “Those are going to provide some near-term savings, and others are going to drive longer-term structural benefits,” she said.
Many other media companies -- legacy TV-movie companies including Warner Bros. Discovery -- as well as dominant streaming company, Netflix -- have cut jobs due to business slowdowns and/or needed cost savings.
Other digital media companies like Meta Platforms, Twitter, and others have also announced staff reductions.
Growing overall U.S. recessionary concerns are also on the mind of executives -- including Chapek. “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.”