Disney plans to freeze hiring and cut jobs, according to memos

Disney ( DIS ) plans to freeze hiring and cut some jobs as it tries to move streaming service Disney ( DIS )+ to profitability amid economic uncertainty, according to a memo seen by Reuters on Friday.

CEO Bob Chapek sent the memo to Disney leaders, saying the company is enacting a targeted hiring freeze and expects “some minor staff reductions” as it tries to manage costs.

“While some macroeconomic factors are beyond our control, achieving these goals requires all of us to continue to do our part to manage the things we can control — most notably our costs,” Chapek wrote in the memo.

The move came after Disney missed Wall Street estimates for quarterly earnings on Tuesday as the entertainment giant posted more losses from its push into video streaming, which it refers to as its direct-to-consumer (DTC) business. The company’s shares fell more than 13% on Wednesday after its results.

Disney said the fast-growing service added 12 million subscribers in its fiscal fourth quarter, but reported an operating loss of nearly $1.5 billion. The company said Disney+ will turn profitable in fiscal 2024, with losses peaking in the quarter.

The streaming service is known for original series including “Star Wars” entries “The Mandalorian,” “Andor” and “Obi-Wan Kenobi,” Marvel entries “WandaVision,” “Hawkeye” and “She-Hulk: Attorney at Law , and content hubs for Disney, Pixar, Marvel and ‘Star Wars’ movies.

Wall Street analysts expressed concern over Disney’s escalating streaming costs. MoffettNathanson analyst Michael Nathanson observed in a note this week that “the company needs to demonstrate that its spin on DTC will be worth the investment price currently being paid.”

Corporate America is making deep cuts to its employee base to prepare for an economic downturn. Meta said this week it would cut more than 11,000 jobs, or 13 percent of its workforce, to cut costs.

One of Disney’s fellow studios, Warner Bros. Discovery, has undergone dramatic cost-cutting efforts, including layoffs, as the newly merged company restructures its content operations.

Chapek said Disney has put together a task force, including Chief Financial Officer Christine McCarthy and General Counsel Horacio Gutierrez, to help him make “critical big picture decisions.”

The company has already started looking at content and marketing spending, but Chapek said the cuts would not sacrifice quality. Hiring will be limited to a small subset of critical positions, and some staff reductions are expected as the company tries to become more cost-effective, Chapek wrote.

Chapek said business travel would be limited, and travel would require prior approval or take place as close as possible.

“Our transformation is designed to ensure that we thrive not only today, but well into the future,” Chapek wrote.

The memo was first reported by CNBC.

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