In a Veteran’s Day email sent to senior staff, Disney CEO Bob Chapek laid out plans for “cost management efforts” as the company enters fiscal 2023, including a hiring freeze, layoffs and budget cuts.
“This work is occurring against a backdrop of economic uncertainty that all companies and our industry are contending with,” Chapek wrote. (As of the time of this writing, Disney stock was trading for $95, up $4 for the day.) “These efforts will help us to both achieve the important goal of reaching profitability for Disney+ in fiscal 2024 and make us a more efficient and nimble company overall.”
Chapek has assigned a group (a “cost structure task force” in his words) comprised of himself CFO Christine McCarthy and general counsel Horacio Gutierrez. Together, the group will “make the critical big picture decisions necessary to achieve our objectives.” Some of these decisions, Chapek wrote, have already happened.
Among the initiatives are “a rigorous review of the company’s content and marketing spending working with our content leaders and their teams.” Chapek hastens to say that the company “will not sacrifice quality or the strength of our unrivaled synergy machine” but that “we must ensure our investments are both efficient and come with tangible benefits to both audiences and the company.”
The company is also instituting a hiring freeze. “Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold,” Chapek wrote.
And, of course, “to achieve both savings and organizational enhancements,” there will be layoffs.
Burying the needle, Chapek wrote, “we do anticipate some staff reductions as part of this review.” Things like business travel will be limited to “essential trips only” and in-person or offsite business gatherings will be conducted virtually. “Attendance at conferences and other external events will also be restricted and require approvals from a member of your executive team,” Chapek wrote.
“Our transformation is designed to ensure we thrive not just today, but well into the future — and you will hear more from our taskforce in the weeks and months ahead,” Chapek wrote. He continued: “I am fully aware this will be a difficult process for many of you and your teams. We are going to have to make tough and uncomfortable decisions. But that is just what leadership requires, and I thank you in advance for stepping up during this important time. Our company has weathered many challenges during our 100-year history, and I have no doubt we will achieve our goals and create a more nimble company better suited to the environment of tomorrow.”
While Chapek paints himself as something of a futurist (you know, just like Walt), his tenure, thus far, has been defined by a series of very public blunders, including (but not limited to) a feud with Marvel Studios star Scarlett Johansson over compensation for her “Black Widow” standalone film; the gutting and forced relocation of former creative lifeblood of the company Walt Disney Imagineering; a cumbersome and cost-prohibitive approach to the Disney Parks that has been alienating some longtime fans; and the political quagmire surrounding Florida’s “Don’t Say Gay” bill and Disney’s bumbling response to it.
And while Chapek wants to pin most of these cost-cutting measures on a quest for Disney+ achieving profitability, there is also the debt load incurred after the company’s acquisition of 20th Century Fox for a whopping $71.3 billion in 2019, less than a year before the pandemic.
As Disney approaches its 100th year with a company-wide celebration, it’ll be interesting to see how this next chapter plays out.