Disney Plans More Layoffs as Covid-19 Pandemic Hits Businesses -- 4th Update
27 November 2020 - 7:23AM
Dow Jones News
By Erich Schwartzel and P.R. Venkat
Walt Disney Co. plans to lay off a total of 32,000 employees by
March, the company said, a further reduction in its workforce that
comes as the pandemic hits the entertainment company's theme-park
businesses especially hard.
The number of layoffs is about 4,000 more employees than the
previously reported 28,000 job cuts announced in September. Most of
the job losses will come in the company's theme-park ranks, where
thousands of workers have already been furloughed or laid off.
The severe cuts to Disney's theme-park division accentuates a
new reality at the company since the pandemic canceled most live
entertainment. Once a reliable moneymaker, the Disney theme parks
are now either operating at reduced capacity or closed altogether,
with one location -- Disneyland in Anaheim, Calif. -- not expected
to reopen until at least next year.
That has forced Disney executives to reorganize the company and
shift focus toward its year-old streaming service, Disney+. The
service's success in finding early subscribers has saved Disney's
share price, which is trading at pre-pandemic levels as investors
warm to its growth potential. Even with several vaccines in
development and possibly available next year, Disney is betting
that its growth for the foreseeable future will come in the living
room, not at the theme-park turnstile.
The company has allocated more resources to its streaming
operations and even shipped some theatrical releases like
"Hamilton" and "Mulan" to the platform. Another service, Star, will
expand further overseas. A recent company reorganization put
streaming at the center of distribution strategy.
Disney has taken several moves since the pandemic's spread to
cut spending and save costs. Earlier this month, the company said
it was forgoing its January 2021 dividend and instead investing
those funds in its streaming division. The suspension was a marked
shift for Disney, which has reliably paid dividends on a
semi-annual basis for the past several years. In its regulatory
filing Wednesday, Disney warned it could continue to forgo upcoming
dividends or cut contributions to employee pension and
postretirement medical plans.
It was not the only warning from Disney that spending would
continue to be drastically reduced. The company also said it might
further reduce capital spending, an indication that the slowdown in
costly initiatives like theme-park construction projects is likely
to continue. Costs in Disney's film and TV divisions might also be
further reduced as the number of productions plummets, and the
company has already furloughed some theme-park employees who had
been called back to work as it appears reopening will take longer
than expected.
"Some of these measures may have an adverse impact on our
businesses," the company warned.
Earlier this month, Disney announced a second consecutive
quarterly loss as the pandemic struck its core businesses such as
theme parks and movie distribution. However, the company's
direct-to-consumer business has emerged as a bright spot as
quarantine life has increased demand for streaming business.
Subscriptions to Disney+ hit 73.7 million as of Oct. 3, up from
more than 60 million reported in August.
Disney said it also plans to launch a general entertainment
video streaming offering under the Star brand outside the U.S. in
2021.
"With the unknown duration of Covid-19 and yet-to-be-determined
timing of the phased reopening of certain businesses, it is not
possible to precisely estimate the impact of Covid-19 on our
operations in future quarters," the company said.
Write to Erich Schwartzel at erich.schwartzel@wsj.com and P.R.
Venkat at venkat.pr@wsj.com
(END) Dow Jones Newswires
November 26, 2020 15:08 ET (20:08 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Walt Disney (NYSE:DIS)
Historical Stock Chart
From Apr 2024 to May 2024
Walt Disney (NYSE:DIS)
Historical Stock Chart
From May 2023 to May 2024