Disney CEO Bob Chapek says he will establish a 'cost structure taskforce,' begin a hiring freeze, and cut staff

24 days ago in "The Walt Disney Company"

Posted: Saturday November 12, 2022 8:00am ET by WDWMAGIC Staff

Following a disappointing quarterly earnings report and shares hitting a new 52-week low, Disney CEO Bob Chapek has told executives that the company will begin a hiring freeze, cut jobs, and establish a new "cost structure taskforce."

In a memo to staff, Chapek said, "Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold. Your segment leaders and HR teams have more specific details on how this will apply to your teams."

He continued, "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."

Disney's new "cost structure taskforce" will consist of Chief Financial Officer Christine McCarthy, General Counsel Horacio Gutierrez and CEO Bob Chapek.

According to Chapek, the "cost structure taskforce" will "look at every avenue of operations and labor to find savings, and we do anticipate some staff reductions as part of this review."



Here is the full November memo from Bob Chapek to Disney Leaders.

Disney Leaders

As we begin fiscal 2023, I want to communicate with you directly about the cost management efforts Christine McCarthy and I referenced on this week's earnings call. These efforts will help us to both achieve the important goal of reaching profitability for Disney+ in fiscal 2024 and make us a more efficient and nimble company overall. This work is occurring against a backdrop of economic uncertainty that all companies and our industry are contending with.

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. You all will have critical roles to play in this effort, and as senior leaders, I know you will get it done.

To be clear, I am confident in our ability to reach the targets we have set, and in this management team to get us there.

To help guide us on this journey, I have established a cost structure taskforce of executive officers: our CFO, Christine McCarthy and General Counsel, Horacio Gutierrez. Along with me, this team will make the critical big picture decisions necessary to achieve our objectives.

We are not starting this work from scratch and have already set several next steps—which I wanted you to hear about directly from me.

First, we have undertaken a rigorous review of the company's content and marketing spending working with our content leaders and their teams. While we will not sacrifice quality or the strength of our unrivaled synergy machine, we must ensure our investments are both efficient and come with tangible benefits to both audiences and the company.

Second, we are limiting headcount additions through a targeted hiring freeze. Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold. Your segment leaders and HR teams have more specific details on how this will apply to your teams.

Third, we are reviewing our SG&A costs and have determined that there is room for improved efficiency—as well as an opportunity to transform the organization to be more nimble. The taskforce will drive this work in partnership with segment teams to achieve both savings and organizational enhancements. As we work through this evaluation process, we will look at every avenue of operations and labor to find savings, and we do anticipate some staff reductions as part of this review. In the immediate term, business travel should now be limited to essential trips only. In-person work sessions or offsites requiring travel will need advance approval and review from a member of your executive team (i.e., direct report of the segment chairman or corporate executive officer). As much as possible, these meetings should be conducted virtually. Attendance at conferences and other external events will also be restricted and require approvals from a member of your executive team.

Our transformation is designed to ensure we thrive not just today, but well into the future—and you will hear more from our taskforce in the weeks and months ahead.

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.

Thank you again for your leadership.
-Bob

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Lilofan14 days ago

Irony that layoffs are talked about and it starts with Chapek.

MrPromey15 days ago

Boy this aged well... and quickly. Even if I do say so myself ;)

wutisgood15 days ago

Bruh like is this real life?

gerarar15 days ago

Smiley/OCD15 days ago

That’s just it…when you’re a one trick pony, and your pony ain’t running the race to well, how long before that pony is exiled to the glue factory…

MrPromey15 days ago

I think that was his saving grace. He may not have had the same genuine enthusiasm as the guy who came before him but he could fake it and he was, himself, a good enough story teller. I think he would have been able to talk to a group of investors about the current situation with earnings and make it possible for more to believe that it was still all part of a master plan - not a surprise, nothing for anyone to lose their minds over - because Disney is a creative company and in that environment, there is going to always be an element of a black box, you have to trust the process, investing in the future, yada, yada, yada, yada. The problem with the Bob we have is, he can't tell a story. He has no discernible public personality and doesn't even seem to like the creative aspect of things. The black box scares him. He's not the guy you want to have reassuring numbers people out there about the black box. One would wonder (as I have) why he would even want to be in charge of a company like Disney beyond the ego trip of being "the boss" (and I guess, the money). As we know, he is firmly a numbers guy, himself. He's replaced or demoted people around him who understood the creative process and put other number people in charge of everything. It's literally all he has to hang his hat on and it's not exactly a secret he is out of his depth in all other aspects within this company. Anyone - investors, fans, politicians - can clearly see it. Fans hate him, politicians see him as a punching bag but as long as those numbers look good, Wall Street will give him a pass. But... when he has to explain how the only thing he's allegedly good at isn't looking so great, there is nothing to divert people's attention with. This Bob and his side kick Christine just tried to smile their way through the numbers on that call. Commentators zeroed right in on it pointing out how the two of them seemed bizarrely chipper and upbeat while giving numbers they had to know were going to rattle Wall Street - like they were somehow detached from reality about it all. News flash to Bob - pretending to be happy while giving out bad news isn't story telling. There's got to be a Master Class you can watch that'll help with this. Maybe the one on acting by Natalie Portman or the one by Richard Branson on Disruptive Entrepreneurship? Heck, maybe Christine could take the one by Steve Martin on comedy so she can come up with some quips to throw out that'll actually make people laugh instead of alienating a portion of their consumer base.

Minnesota disney fan16 days ago

I'm from extreme N. Minnesota and hockey is King here. Kids start when they are able to walk and keep at it, IF they can afford it. It's very expensive to have kids play hockey here. It's funny how different areas have different sports they love. I lived in Tennessee, and baseball was King. In Ohio it was Ohio State Football, LOL, and the Cincinnati Reds. Just an observation of those states.

TP200017 days ago

That's the sport they play in Celsius, right?

Mousertainment17 days ago

They pretty much do. Through Amazon at least twice in the past year they offered it for 99 cents/month for two months. Have had Hulu for 99 cents/month for the past year and just canceled because the promo price ran out and wasn't going to pay more than that for it. But Disney is still getting my money since I took the year deal with them before that price goes up, too. Plan to cancel at the end of that and just churn in and out for new Marvel content unless they offer some kind of promo price then, too.

Lilofan17 days ago

I enjoy watching the very talented hockey players from Canada playing for teams here in the USA.

Lilofan17 days ago

All that money those hockey players make and can’t seem to get implants for their missing teeth ?

Jrb197917 days ago

My point wasn't about the hockey. More that we as a family have no interest in most streaming services.

JoeCamel17 days ago

My point

Jrb197917 days ago

I'm from Canada and we like hockey here.