disney plans to institute a targeted hiring freeze as well as job cuts, according to an internal memo sent to executives.
“We are limiting headcount additions through a targeted hiring freeze,” CEO Bob Chapek said in a memo to division heads sent Friday and obtained by CNBC. “Hiring for the small subset of the most business-critical and important positions will continue, but all other roles are on hold. Your segment leaders and HR teams have more specific details on how which this will apply to your teams.”
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 setting up “a cost structure task force” which will consist 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’re going to have to make some tough and uncomfortable decisions. But that’s exactly what leadership requires, and I thank you in advance for stepping up during this important time.”
The changes come after Disney announced disappointing quarterly results. Shares of the company fell sharply on Wednesday, hitting a new 52-week low, before rebounding later in the week.
McCarthy said during Disney’s earnings call on Tuesday that the company is looking for ways to cut costs.
“We are actively evaluating our cost base right now and looking for significant efficiencies,” she said. “Some of them will provide short-term cost savings, and others will generate longer-term structural benefits.”
Disney’s streaming services lost $1.47 billion last quarter, more than double the unit’s loss from a year earlier. McCarthy said losses would improve in 2023 and Chapek promised streaming would become profitable by the end of 2024.
Other major media and entertainment companies, including Discovery of Warner Bros. and netflix, have shed jobs this year as valuations have fallen. Disney has not announced any plans to cut jobs.
As we begin fiscal 2023, I want to communicate directly with you about the cost management efforts that Christine McCarthy and I mentioned on this week’s earnings call. These efforts will help us both achieve the important goal of achieving profitability for Disney+ in fiscal year 2024 and make us a more efficient and agile company overall. This work is taking place against a backdrop of economic uncertainty that all businesses and our industry face.
Although some macroeconomic factors are beyond our control, to achieve these goals we must all continue to do our part to manage the things we can control, including our costs. You will all have a vital role to play in this effort, and as senior leaders, I know you will succeed.
To be clear, I am confident in our ability to achieve the goals we have set for ourselves, and in this management team to get us there.
To guide us on this journey, I have established a cost structure task force comprised of senior executives: our Chief Financial Officer, Christine McCarthy and our General Counsel, Horacio Gutierrez. With me, this team will make the important decisions necessary to achieve our goals.
We are not starting this work from scratch and have already defined several next steps, which I wanted you to hear from me directly.
First, we undertook a rigorous review of the company’s content and marketing spend in conjunction with our content managers and their teams. While we don’t sacrifice the quality or strength of our unrivaled synergy machine, we must ensure that our investments are both effective and deliver tangible benefits to both the public and the company.
Second, we are limiting headcount additions through a targeted hiring freeze. Hiring for the small subset of the most critical and business-focused positions will continue, but all other roles are on hold. Your segment managers and HR teams have more specific details on how this will apply to your teams.
Third, we are reviewing our SG&A costs and have determined that there is room for improved efficiency, as well as an opportunity to transform the organization to be more agile. The task force will drive this work in partnership with segment teams to achieve both cost savings and organizational improvements. During this evaluation process, we will review all operational and workforce opportunities to find savings, and we anticipate some staff reductions as part of this review. In the immediate future, business travel should now be limited to essential travel only. In-person or off-site work sessions requiring travel will require prior approval and review from a member of your leadership team (i.e., a direct report from the Segment President or General Manager of the company). Whenever possible, these meetings should take place virtually. Attendance at conferences and other external events will also be restricted and will require the approval of a member of your management team.
Our transformation is designed to ensure we thrive not just today, but well into the future – and you’ll hear more from our task force in the weeks and months ahead.
I am fully aware that this will be a difficult process for many of you and your teams. We are going to 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. Our company has overcome many challenges over its 100-year history, and I am confident that we will achieve our goals and create a more agile company that is better suited to the environment of tomorrow.
Thanks again for your leadership.