Disney’s Bob Chapek orders hiring freeze, cost cuts to make Disney+ profitable
The news broke on Tuesday at 6AM ET.
A Disney executive told The Wall Street Journal that layoffs — and not the $71 million that some investors were calling for — were the reason for the Disney board to call an all-hands meeting on Monday to decide if the company could make a profit on its proposed $71 million per year charge to customers for the high-definition version.
Disney is reportedly looking at the cost cutting measure which it reportedly is considering as a way to ensure it makes a $1.3 billion profit on the standalone streamer Disney+ and a $2 billion profit on original content Disney and Pixar are producing — at least if they can hit their delivery date.
While investors have criticized Disney over how it has run its business and over its overall performance, the company is the third-biggest revenue generator in the media industry.
It has a $4.3 billion net loss last quarter, and a profit in the last four quarters of $1.2 billion including that time when it was still the No. 3 media company in the U.S.
According to the Journal, Disney CEO Bob Chapek told the meeting that the cost cutting measures were needed to ensure Disney+ could grow to be profitable. The idea is that Disney could have as many as 15 to 20 shows on the service, like Netflix.
It’s currently unclear what will happen to the cost cutting measures as the company has yet to decide if Disney+ will return money to Disney shareholders or go it alone with licensing fees.
Disney said on Thursday that it will announce on or around Christmas 2019 that it is exiting its acquisition of 21st Century Fox and will be exiting Fox broadcast, cable, and streaming services. The company will then file a definitive proxy statement for Disney’s initial public offering that will be scheduled in early 2020. It will issue a press release to announce it in early 2020.
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