Bob Chapek Announces “Targeted Hiring Freeze” at Disney

On November 8, Disney held its Fourth Quarter Earnings Call, and things did not go as well as the company had hoped. Even though Disney recorded a staggering $28 billion in profit, revenue-per-share for Disney+ fell below Wall Street expectations. Disney Parks, Experiences, and Products also underperformed. Not long after the call, after-hours trading began on Wall Street, and, the next morning, it was revealed that Disney experienced a 13% drop in its stock value.

Now, just days after the Earnings Call, Disney CEO Bob Chapek has announced that Disney will begin a “targeted hiring freeze”. That is in addition to job cuts that will also soon take place.

Bob Chapek sent out the following memo to employees, which was shared with CNBC:

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

Since he stepped into the position of CEO of The Walt Disney Company in 2020, Chapek has become known as a CEO who cuts costs and raises prices. Guests visiting Disney Parks are being vocal about paying more while getting less for nearly everything. Chapek is being held responsible for getting rid of the free FastPass system and instituting Disney Genie+, which varies in cost per day.

During the Earnings Call, CFO Christine McCarthy said that the company was continuing to look for ways to cut costs — leading to the hiring freeze and job cuts. The last time McCarthy spoke at length about cost-cutting, she talked about Disney changing food vendors — opting to go with cheaper ones — and cutting food portions while keeping costs where they are or increasing them.

Disney has not responded publicly to the leaked memo.

Disney Stock Tanks After Bob Chapek Touts “Record Results”

On November 8, The Walt Disney Company held its 4th Quarter Earnings Call. During the call, Disney CEO Bob Chapek offered a very positive outlook on the numbers, calling this year some of Disney’s “best storytelling yet” and reports revealed that Disney had made a mind-boggling $28 billion profit. Chapek also revealed that Disney added more than 12 million subscribers to its Disney+ and streaming platforms worldwide and that the streamer was still on target to be profitable by 2024.

Disney Parks, Products, and Experiences were some of the most profitable areas for Disney, but that could simply be because Disney is charging sky-high prices and offering less, so, naturally, Guest spending will be up.

Even though Disney+ added millions of subscribers, the “revenue-per-user” came in under what analysts were predicting. Disney also shared that Disney+ subscriber growth is expected to fall in the next quarter. Disney’s consumer products numbers also came in below expectations, which caused Disney’s stock to take a massive hit after the Earnings call. The stock market as a whole took a slight hit, but Disney seemed to get hammered.

Here’s more on Disney’s underperformance and what could have caused it, via MarketWatch:

Disney executives blamed a number of factors for the revenue miss, including lower content sales because they had fewer theatrical films on the calendar; underperformance of the parks and media divisions; and seasonality of its fourth quarter, which tends to be the lowest for margins.

In a conference call Tuesday afternoon, though, Chief Financial Officer Christine McCarthy suggested that revenue and profit growth will slow to single digits on a percentage basis in the current fiscal year, missing Wall Street’s expectations. Analysts’ average revenue projection for Disney in the new fiscal year suggested revenue growth of about 13.9% and operating-income growth of roughly 17.4%, according to FactSet.

After-hours trading saw Disney’s stock take a 10% drop before finally closing down 6.8%. When regular trading ended, the stock was only down .5%, so the Earnings call is most likely responsible for the hard hit.

It has been a rough year for Disney, whose stocks are down more than 35% from last year’s numbers.

What Comes Next for Disney Acquisitions

Under the direction and leadership of former Disney CEO Bob Iger, the company went on an impressive buying streak. The number of properties Disney-owned properties expanded at an explosive rate. For those keeping track at home of the Walt Disney Company’s quest for world domination, in addition to Disney branded content, the company owns Pixar, Marvel, Lucasfilm, ESPN, 20th Century Studios, Hulu, ABC, 21st Century Fox, Touchstone Pictures, Hollywood Records, A+E Networks, Searchlight Pictures, National Geographic, Hollywood Pictures, and a whole slew of non-Disney branded hotels in California. That’s…a lot. It seems like, eventually, Disney is going to own everything, so what’s next?

Well, nothing, actually. During his sit down with the Wall Street Journal, current CEO Bob Chapek said, “We have the best creative teams, the best brands, and franchises in the world,” said Chapek, speaking at the WSJ Tech Live 2022 conference Wednesday. “We’re quite happy to have the output level across our channels without having to be a buyer in the open marketplace. At this point, our plan is to have all our content creation self-contained.”

That means they aren’t looking to buy anything new for the foreseeable future. This could be because the company is trying to make up for COVID losses, or it could be that they intend to pour their creative dollars into their in-house streaming network, Disney+.

The latter certainly seems to be the case as Chapek expressed full confidence in Disney+ and its ability to beat out the rest of the competition, saying that “not everybody who’s out in the marketplace today will survive. This is a critical-mass business. Scale is really, really important to be able to thrive.” He believes Disney+ has that scale and will become the ‘must-have’ streaming service even as others around it falter, which he predicts will happen soon.

The CEO also said that Disney was currently in a great position in terms of content creation. After shutdowns and restarts from the pandemic, the company can “finally reach some level of stability in terms of producing content at the right cadence,” according to Chapek, “now we can very thoughtfully plan the amount of content we need for each channel without over producing or under producing.”

ESPN bets

As for whether he intends to sell off any of the brands they currently own? Not likely. When specifically asked about ESPN, which activist investor Dan Loeb recently recommended they sell off, Chapek expressed his desire to keep current assets, especially ESPN. “To the sports fan, it is the power brand out there,” Chapek said, adding that “There are dozens of companies that would love to have that.”

Bob Chapek

Time will tell whether Disney is done acquiring new properties for good or if this is a temporary strategy, but for now, it’s a safe bet that Batman won’t join the House of Mouse any time soon.

Bob Chapek Responds to Criticism

In February 2020, popular Walt Disney CEO Bob Iger stepped down from his role as CEO and became the Executive Chairman of The Walt Disney Company. The Chairman of Disney Parks, Experiences, and Products — Bob Chapek — took over the role of CEO and his tenure has been…rocky to say the least. Just one month after he became CEO, the COVID-19 pandemic forced all Disney theme parks, including Walt Disney World Resort and Disneyland Resort, to shut down. All film and television production shut down as well, so Disney furloughed and laid-off thousands of Cast Members.

While dealing with a worldwide pandemic was the most difficult way to start as CEO that one could imagine, many feel Chapek has not done much since then to endear himself to Disney’s loyal fan base. Over the past couple of years, things seemed to have drastically changed in the eyes of Disney fans — the Parks are getting outrageously expensive, while the quality seems to be declining. A recent poll also shows that an overwhelming number of Guests feel that Disney “has lost its magic”.

Cinderella Castle at Night

Chapek has caught most of the fan’s ire for what is happening at Disney. In Disney circles, Chapek is seen as someone who is more focused on making money than making magic for Guests. This has led to petitions calling for Chapek to either resign or be fired.

Chapek recently sat down with The Hollywood Reporter, and he was asked about being seen as “a guy who cuts costs and raises prices” and getting a lot of flack from those who call themselves “Disney superfans”. Chapek didn’t shy away from the question and said:

We love all our fans equally. We love the superfans, obviously. But we also like the fans that don’t have the same expression of their fandom. We want to make sure that our superfans who love to come with annual passes and use [the parks] as their personal playground — we love that. We celebrate that. But at the same time, we’ve got to make sure that there’s room in the park for the family from Denver that comes once every five years. We didn’t have a reservation system and we didn’t control the number of annual passes we distributed and frankly, the annual pass as a value was so great that people were literally coming all the time and the accessibility of the park was unlimited to them, and that family from Denver would get to the park and not be let in. That doesn’t seem like a real balanced proposition. I guess it’s possible that the superfans look at that as a disadvantaging of the way they consume the park, but we’ve got to make sure that not only are we heeding the needs of our superfans, but we’re heeding the needs of everyone who travels from across the country one time every five years. We have a real high-class problem: We have much more demand than there is supply. What we will not bend on is giving somebody a less than stellar experience in the parks because we jammed too many people in there. If we’re going to have that foundational rule, you have to start balancing who you let in. … Our ticket prices and constraints we put on how often people can come and when they come is a direct reflection of demand. When is it too much? Demand will tell us when it’s too much.

His answer may not be what fans of the theme parks want to hear. Chapek is basically saying that prices will drop when they notice a drop in theme park attendance — which will most likely be a sign that things are too expensive — but many can tell you that the Parks seem just as crowded as they were before the pandemic. Disney is also reporting record profits, but that has to be balanced out with the high prices that they are charging.

Even though Chapek might not be seen as very popular with the Disney fan base, he appears to be popular with Disney’s Board of Directors, which extended Chapek’s contract by 3 years this past June.

Disney CEO Bob Chapek Booed After Walking on Stage at D23 Expo

Via InsideTheMagic.net

Disney D23 is “The largest Disney fan event in the world,” and this year’s expo will be no different. This year’s D23 Expo celebrates the wonderful worlds of The Walt Disney Company, including Disney, Marvel, Pixar, and Star Wars, across film, television, theme parks, and more!

However, when Disney CEO Bob Chapek took the stage earlier today, some Guests in attendance gave him a not-so-warm welcome.

You can check out the short video down below, thanks to a tweet from Thomas Lipscomb (@tmmylps):

As you can see, and hear, the CEO was booed by more than a few people in attendance while taking centerstage.