The Walt Disney Company appears to be in crisis mode. Amidst a “roller coaster stock market” and earnings misses, CEO Bob Chapek has announced hiring freezes and layoffs. He further iterated that “tough and uncomfortable” decisions were on the horizon.
While Disney is usually synonymous with financial success, its recent financial reports indicate that, like other media companies, it has been feeling the effects of a sluggish economy. Employing approximately 190,000 employees, its stock has been down by more than 40% while fluctuating foreign currency and inflation on the home front have been applying pressure on the company’s earnings. The company’s recent quarterly earnings were below expectations and the company had some bleak news for the 2023 fiscal year.
According to a report by Deadline, Chapek sent out a memo to Disney executives highlighting the issues the company was facing and delineating the steps the company would be taking moving forward. The letter justifies the cost-cutting and layoffs by stating, “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.” He also announced the creation of a task force to manage the finances of the company, saying, “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.”
He then goes on to explain the hiring freeze and explains several other smaller policies that will be put into place at Disney. “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,” Chapek said. “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.”
The fact that several media companies are feeling some financial burnout probably means the economy is in a downturn as of late. Talk of a recession has been on the minds of many since even before the pandemic hit. While it hasn’t been confirmed, it does seem like the pandemic is playing a part in these financial woes. Theatrical releases were impacted heavily for over two years – over 700 movie theaters closed in North America in 2020 alone – and that might be why several companies such as Disney are reporting low earnings.
Now that the pandemic has receded somewhat and people are attempting to return to a sense of normalcy, things may look up. It will probably be a slow process, however, and there’s no guarantee when that may happen. For now, it looks like lean times are ahead at several media companies, including Disney, and a long road ahead for theaters looking to survive the pandemic.