Disney CEO Bob Chapek sent an internal memo to executives that announces plans for a “targeted hiring freeze” and expected job cuts. The memo, which was obtained by CNBC, comes in response to Disney’s latest quarterly earnings report that stated the company would be reviewing costs.
Chapek on the hiring freeze, via CNBC:
“We are limiting headcount additions through a targeted hiring freeze. Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold. Your segment leaders and HR teams have more specific details on how this will apply to your teams.”
Chapek added that some jobs will be cut as Disney evaluates their expenses.
“As we work through this evaluation process, we will look at every avenue of operations and labor to find savings, and we do anticipate some staff reductions as part of this review.”
While Chapek and Disney did not announce layoffs, they do plan to scale back their workforce. It’s unclear where these reductions may take place.
Chapek briefly touched on Disney’s investments in content and how that may change moving forward.
“While we will not sacrifice quality or the strength of our unrivaled synergy machine, we must ensure our investments are both efficient and come with tangible benefits to both audiences and the company.”
“Unrivaled synergy machine” is a sentence that perfectly reflects how modern Disney leadership views the company.
However, evaluating Disney’s expenses in content needs to happen. Streaming costs have soared. The return on those investments is debatable, with some shows falling well short of expectations (Obi-Wan, Book of Boba Fett). Disney has been churning out Star Wars and Marvel content rapidly, but some fans have argued the quality has slipped. That’s a problem when the price to create these shows is so expensive. Quality over quantity. More shows like Andor and fewer shows like Obi-Wan.
Finally, Chapek wrapped by saying non-essential travel should reduced.
“In the immediate term, business travel should now be limited to essential trips only. In-person work sessions or offsites requiring travel will need advance approval and review from a member of your executive team (i.e., direct report of the segment chairman or corporate executive officer). As much as possible, these meetings should be conducted virtually. Attendance at conferences and other external events will also be restricted and require approvals from a member of your executive team.”
Disney isn’t the only company that’s tightening their budget at this time. However, Disney’s business approach can be scrutinized by theme park fans. The theme park division continues to generate enormous profits. The past quarter saw the parks, experiences and products segment bring in record revenue of $7.4 billion. Unfortunately, while guests pay more, the experience and value to visit the theme parks has diminished.
The infamous Theme Park Reservation system is already used by Disney to manage staffing at its theme parks. Cost cuts have already been observed through reduced staffing, reduced maintenance, and a lack of new construction projects. Additional cuts may only increase the divide between theme park fans and Disney leadership as the park experience is weakened further. There can not be an additional reduction in frontline cast members.
It’s also worth noting that the competition, Universal, is currently building a new theme park in Orlando. Disney’s response, to date, has been to mostly ignore the rising challenge. This latest pause should only solidify that response.
Unfortunately, it looks like there’s some rough times ahead for Disney fans. Will guests continue to pay high prices? Will Disney have to change course with its management?