Walt Disney Co is planning to freeze hiring and cut some jobs as it strives to move the Disney+ streaming service to profitability against a backdrop of economic uncertainty, according to a memo seen on Friday.
Chief Executive Bob Chapek sent the memo to Disney's leaders, saying the company is instituting a targeted hiring freeze and anticipates "some small staff reductions" as it looks to manage costs.
"While certain macroeconomic factors are out of our control, meeting these goals requires all of us to continue doing 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 racked up more losses from its push into streaming video, which it refers to as its direct-to-consumer (DTC) business. Shares of the company fell more than 13% on Wednesday following its results.
Disney has 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+ would become profitable in fiscal 2024, with losses having peaked in the quarter.
The streaming service is known for original series including the "Star Wars" entries "The Mandalorian," "Andor" and "Obi-Wan Kenobi," the Marvel entries "WandaVision," "Hawkeye" and "She-Hulk: Attorney at Law," and content hubs for Disney, Pixar, Marvel and "Star Wars" films.
all Street analysts voiced concern about Disney's escalating streaming costs. MoffettNathanson analyst Michael Nathanson observed in a note this week that "the company has to prove that their pivot to DTC will be worth the investment price that is currently being paid."
Corporate America is making deep cuts to its employee base to brace for an economic downturn. Meta Platforms said this week it would cut more than 11,000 jobs, or 13% of its workforce to rein in costs.
One of Disney's studio peers, Warner Bros Discovery, has undergone dramatic cost-cutting efforts, including layoffs, as the recently merged company restructures its content operations.
Chapek said Disney has established a task force, including Chief Financial Officer Christine McCarthy and General Counsel Horacio Gutierrez, to help him make "critical big picture decisions."
The company already has begun 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 anticipated, as the company looks to make itself more cost-efficient, Chapek wrote.
Chapek said business travel would be limited and trips would require advance approval, or conducted virtually as much as possible.
"Our transformation is designed to ensure we thrive not just today, but well into the future," Chapek wrote.
The memo was first reported by CNBC.