ANAHEIM, Calif. — The CEO of the Walt Disney Co. told senior leaders to be ready "to make tough and uncomfortable decisions" as the company enacts a hiring freeze, implements cost-cutting measures, and prepares to lay off some staff in the backdrop of economic uncertainty.
In a nearly 600-word internal memo, Disney CEO Bob Chapek told executives he has already assembled a cost structure task force evaluating the company’s performance.
The task force, made up of himself, chief financial officer Christine McCarthy and General Counsel Horacio Gutierrez, "will make the critical big picture decisions necessary to achieve our objectives" of cost savings and profitability.
The multi-prong approach, Chapek said, includes:
- Reviewing the company's content and marketing spending.
- Instituting a hiring freeze for most roles but critical positions.
- Some staff reductions.
Chapek also encouraged executives to limit business travel to only essential trips and, as much as possible, hold the meetings virtually.
"I am fully aware this will be a difficult process for many of you and your teams," said Chapek in the memo. "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."
Disney’s decision comes as big tech and media companies buckle down amid a looming recession and as high inflation cuts consumer spending.
After generating record profits during the height of the coronavirus pandemic, many companies overestimated the continued growth of digital advertisements, streaming services and e-commerce.
Now, many are paying the price.
Meta, the parent company of Facebook, announced earlier this week that it would lay off 11,000 employees.
Twitter cut over 3,700 jobs shortly after the new owner, Elon Musk, closed his $44 billion acquisition of the social media company.
Snap, Netflix, Robinhood, Chime, Warner Bros., and more have announced layoffs in recent months.
Disney is coming off a poor quarter in which the company lost more than $1.5 billion in its streaming unit, including Disney+, Hulu, and ESPN+ direct-to-consumer service, Reuters reported.
Shares of Disney fell 9% after its earnings call this week.
Chapek told his senior executives that part of the company's restructuring and cost-cutting measures are part of an effort to "achieve the important goal of reaching profitability for Disney+ in fiscal 2024 and make us a more efficient and nimble company overall."
He implored his leaders to do their part in managing costs.
"You all will have critical roles to play in this effort, and as senior leaders, I know you will get it done," said Chapek.
"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," he added.