Walt Disney announced a companywide cost-cutting drive, including a hiring freeze on all but the most important jobs, days after a wider loss in streaming led to its worst one-day stock rout in more than 20 years.
A new executive committee that includes Chief Financial Officer Christine McCarthy and General Counsel Horacio Gutierrez will spearhead the savings efforts, according to a memo Friday from Chief Executive Officer Bob Chapek. That will include staff cuts.
The entertainment giant shocked investors this week when it reported lower-than-expected quarterly sales and profit, with two its key businesses — streaming and parks — registering disappointing results.
“We are limiting headcount additions through a targeted hiring freeze,” Chapek said in the memo. “Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold.”
The company also instructed employees to take only essential trips for business travel, and said it will require management approval to attend conferences and other events.
Losses at Disney’s direct-to-consumer arm, driven by the Disney+ streaming service, more than doubled to $1.47 billion in the company’s fiscal fourth quarter, due to higher programming expenses and the cost of rolling the service in new countries.
The shortfall led management to pledge it would seek “meaningful efficiencies” in areas like marketing. Chapek said at the time that the company’s streaming losses were peaking.
“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,” Chapek wrote on Friday.
CNBC reported earlier Friday on the cost-cutting drive.
Shares of Disney rose fractionally to $95.51 in extended market trading. The stock is down 39% this year, including a 13% drop on Nov. 9, the day after the company reported financial results.
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