Disney+ optimizes costs and freezes hiring

Disney+ optimizes costs and freezes hiring

Disney is reining its spending after reporting that the company fell short of Wall Street's earnings guidance for the latest quarter. As a result of the drop in the company's profits, its shares fell to a new 52-week low.

In an internal memo, Disney CEO Bob Chapek told division executives that the company has set up a cost structure taskforce in order to help the streaming service meet its profitability targets.

In a memo, Bob Chapek recalled the cost management efforts he and Christine McCarthy mentioned earlier on the company's earnings call. Chapek also says that all of these efforts will help the company deliver even greater profits in fiscal 2024, as well as make the company more efficient and nimble overall. The director of a mass media and entertainment conglomerate also mentioned that this work comes amid economic uncertainty that all companies in the industry are struggling with.

The taskforce, which includes Chapek, General Counsel Horacio Gutierrez and Disney CFO Christine McCarthy, will make the critical decisions necessary to achieve Disney+'s goals.

In the memo, Chapek also confirmed that the company is expecting staff cuts. He also added that the taskforce had already conducted a thorough review of the company's marketing spending as well as its content.

Chapek says he is fully aware of how difficult this process will be for many of the company's employees as well as their teams. Next year the company will certainly have to make many difficult decisions, but this is what management requires. Bob Chapek also thanked the company's employees for stepping up at this important time.

Disney+, Hulu and ESPN+ collectively lost $1.5 billion in the latest quarter. The median revenue per user for Disney+ was also disappointing, dropping to $3.91 (compared to the $4.29 forecast).

Despite mounting losses, Disney+ subscribers grew by 12 million, beating expectations of just over 9 million.

The media giant has warned that in the first quarter of next year it expects Disney+ subscriber growth as well as India's Hotstar subscriber numbers to decline. Content spending in 2023 is expected to be less than $30 billion.

Summing up, Bob Chapek said that in its 100-year history, Disney has overcome many different challenges. New challenges will also be overcome and consequently the company will be better adapted to the environment of tomorrow.