Disney to begin targeted layoffs and hiring freeze, says Bob Chapek

Disney is planning layoffs and a targeted hiring freeze as part of “cost management efforts” to begin its 2023 fiscal year, Disney CEO Bob Chapek said in a memo Friday.

Chapek said in the memo obtained by IndieWire that he believed it was possible to make the organization "more agile" and have "improved efficiency", which they said would result in " some staff cuts," although he did not disclose how many layoffs would be forthcoming or in which departments. Regarding the targeted hiring freeze, Chapek said in the memo that only "hiring for the small subset of positions most critical and important to the business will continue, but all other roles are suspended".

Chapek further announced that the company would limit employee travel to essential travel and begin a "rigorous review" of the company's content and marketing spend. As part of this review, the CEO will lead a cost structure task force alongside Chief Financial Officer Christine McCarthy and General Counsel Horacio Gutierrez.

“While 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 critical role to play in this effort, and as senior leaders, I know you will succeed," Chapek wrote in the memo on Friday. "To be clear, I am confident in our ability to achieve the goals we have set for ourselves, and in this leadership team to get us there."

The changes come after Disney, in its earnings call on Tuesday, revealed operating losses in its direct-to-consumer (DTC) segment, which includes Disney+, of $1.5 billion, despite the market expectations by adding 12.1 million subscribers to the streaming service, and Chapek on Friday reiterated his goal set out in the earnings call to make Disney+ profitable by fiscal year 2024. Disney shares this week fell 7%, their lowest level in two years.

“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,” Chapek said to conclude his memo. that leadership requires, and I thank you in advance for your mobilization during this important period. 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. »

Read the full memo below:

Disney Executives –

As we enter fiscal 2023, I want to speak directly to you about the cost management efforts that Christine McCarthy and I referenced during 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.

While some macro 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 leadership 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 Chief Legal Officer, 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 do not sacrifice the quality or strength of our unparalleled 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 review our SG&A fees and have determined that t...