A memo obtained by Reuters on Friday said Disney (DIS) has frozen hiring and temporarily closed its doors as it strives to turn its Disney (DIS)+ streaming service profitable amid economic uncertainty. We are planning to reduce the number of personnel in the department.
CEO Bob Chapek has sent a memo to Disney executives saying the company is implementing a targeted hiring freeze and expects “several minor staff cuts” to control costs. said that he is
“Certain macroeconomic factors are beyond our control, but achieving these goals requires that we all do our part to do what we can control, especially costs. We need to keep playing,” Chapek wrote in a note.
The move comes after Disney underperformed Wall Street estimates in Tuesday’s quarterly results. That’s because the entertainment giant racked up more losses with its foray into streaming video, which it calls the direct-to-consumer (DTC) business. The company’s shares fell more than 13% on Wednesday following the results.
Disney said the fast-growing service added 12 million subscribers in the fourth quarter, but reported an operating loss of nearly $1.5 billion. According to the company, Disney+ will be profitable in his 2024 fiscal year, with losses peaking in the quarter.
The streaming service is known for original series such as Star Wars’ The Mandalorian, Andor, and Obi-Wan Kenobi, Marvel’s WandaVision, Hawkeye, and She-Hulk: Attorney. I’m here. , and a content hub for Disney, Pixar, Marvel, and Star Wars movies.
Wall Street analysts have expressed concern about Disney’s skyrocketing streaming costs. “The company must prove that a pivot to DTC is worth the investment price currently being paid,” MoffettNathanson analyst Michael Nathanson said in a note this week.
Corporate America is slashing its employee base in preparation for the recession. Meta said this week it will cut more than 11,000 jobs, or 13% of his workforce, to keep costs down.
One of Disney’s peer studios, Warner Bros. Discovery, has made dramatic cost-cutting efforts, including job cuts, as the recently merged company restructures its content business.
Chapek said Disney will set up a task force, including chief financial officer Christine McCarthy and general counsel Horacio Gutierrez, to help him make “important big picture decisions.” .
The company has already started looking at spending on content and marketing, but Chapek said the cuts won’t come at the expense of quality. Hiring will be limited to a small percentage of key positions, and some layoffs are expected as the company seeks to become more cost-effective, he wrote.
Mr Chapek said business travel will be restricted and will either require prior approval or will be conducted virtually where possible.
“Our transformation is designed to ensure that we thrive not just today, but well into the future,” Chapek wrote.
The memo was first reported by CNBC.
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