Disney CEO Bob Chapek has warned of “tough and uncomfortable decisions” ahead and has set up a cost structure taskforce to implement measures that will include staff lay-offs, a hiring freeze, and travel restrictions.
Chapek informed executives of the move in a memo today. Disney missed revenue and earnings targets in the fourth quarter and its stock has tumbled approximately 37% in the last 12 months.
More broadly the company anticipates belt-tightening as other media giants are doing in response to the rough economy. Warner Bros Discovery has implemented lay-offs as it seeks to cut $3bn and Paramount Global has indicated cuts are on the horizon.
CFO Christine McCarthy and general counsel Horatio Gutierrez will comprise the taskforce and it was McCarthy who told analysts during the earnings call earlier this week that the company would need to make “meaningful efficiencies”.
Executives will be asked to eliminate all but essential business travel, and Chapek encouraged them in the memo to take virtual meetings wherever possible. The company will review its content and marketing spend, although it remains to be seen what impact that will have on non-tentpole theatrical features, or on production of originals for the streaming platforms.
In an excerpt from the memo the Disney CEO said, “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.”
It emerged during this week’s earnings call that Disney+ added 12.1m global subscribers to reach 164.2m. The ad-free tier launches next month and the platform is expected to become profitable in fiscal 2024.
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