Disney is preparing to make cuts due to the company's low profits. The company will limit hiring new employees as part of its plan to reduce costs and they haven’t ruled out possible layoffs.
According to an internal message accessed by CNBC, Disney CEO Bob Chapek asked the company's division heads to freeze new contracts; limit business travel; set up virtual meetings whenever possible; and put in place a team to study a new business plan to help the company save money. The group consists of three people: Chapek himself, CFO Christina McCarthy and General Counsel Horacio Gutiérrez.
The group's top executive acknowledged that "uncomfortable decisions" will have to be made, not excluding a possible cut in staff. "I am fully aware this will be a difficult process for many of you and your teams," Chapek wrote, as reported by Variety. "We are going to have to make difficult and uncomfortable decisions."
"But that is just what leadership requires," he continued, "and I thank you in advance for stepping un 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."
Massive layoffs in large companies
The entertainment giant joins other companies in the sector such as Netflix, Meta or Twitter, which launched plans to cut costs, in many cases including massive layoffs.
The biggest cut is the one announced by Meta. Marc Zuckerberg's company will lay off 13% of its workers. More than 11,000 people will lose their jobs at the technology company.
In the case of Disney, the cost reduction plan comes after lower-than-expected results. The company posted a net profit of $3.14 billion in the 2022 fiscal year. However, it didn’t reach profit expectations in the fourth quarter and warned that streaming growth could slow down in the future.
Losses driven by its Disney+ streaming service, soared to $1.47 billion in the fourth quarter, due to higher programming expenses and the cost of global expansion. Weak cable television advertising revenues also hurt the company's results, and it is now looking to cut expenses in the hopes of improving its profitability.
