Disney’s asking 4,000 workers to leave the Mouse House.
The “voluntary layoffs,” involving 3% of Disney’s worldwide workforce, would carry unspecified boosted severance benefits, according to a letter sent to “Fellow Cast Members” by chief Michael Eisner and prexy Robert Iger on Tuesday. But the electronic missive also acknowledges some number of employees may be laid off involuntarily if insufficient numbers apply for the buyouts.
Disney officials declined to comment on details of the severance package to be offered. But a spokesman did add the conglom would take a one-time charge of $200 million, mostly in the third and fourth quarters, to pay for the moves.
The Eisner-Iger letter blamed a “challenging” economic climate for the layoffs. “This reduction will affect business units in all of our operations, as well as corporate staff,” the letter stated.
No cuts will be made in staff involving safety supervision or guest relations, spokesman Ken Green said. He also acknowledged the offer of voluntary layoffs isn’t being extended to any unionized employees “at this time,” due to certain collective-bargaining arrangements.
“Disney, like a lot of other companies, is clearly looking at the overall weakening in the economy and using this opportunity to trim some fat,” UBS Warburg analyst Christopher Dixon said.
“Given this economy, it’s the prudent thing to do,” Merrill Lynch analyst Jessica Reif Cohen said.
Disney’s Green estimated the conglom will reap savings of more than $300 million a year from the staff reductions.
The company’s growth targets remain intact, barring a protracted economic downturn, he added. Disney has indicated it expects single-digit earnings growth through the current fiscal year and longer-term expansion in operating income of 13%-15%
Disney has huge operations in film, television and theme parks, and several smaller units in a variety of niches from new media to hospitality. Heads of individual business units have been asked to review their operations to formulate specific plans for job eliminations.
Theme parks operations represent Disney’s biggest payroll, employing 77,000 of conglom’s 120,000 worldwide workforce. It’s considered likely upward of 1,200 of the job cuts will come from the sprawling Walt Disney World theme park in Orlando and at least another 200 positions will be eliminated at Disneyland in Anaheim.
Among film operations, certain units are considered bare-bones already and are unlikely to be affected by the job cuts. Those include the Buena Vista Motion Picture Group, a film-development unit with fewer than 20 employees.
Second round on TV side
On the TV side, there has been belt-tightening already, including layoffs at ABC News, but it was not immediately clear how many more positions would be eliminated in the news division or elsewhere at the Alphabet web. Disney also has substantial cable TV operations, including sports giant ESPN.
About 535 employees at Disney’s Internet operations were laid off earlier this year.
“We intend to achieve the reduction to the greatest extent possible through a voluntary separation program that will provide participating employees with special severance incentives, extended benefits and outplacement services,” the Disney execs’ letter stated. “We hope that a sufficient number will choose to participate in this voluntary plan. However, if our goal is not met through this voluntary plan, mandatory workforce reductions with lower severance benefits will be required.”
Information will circulate in the next 10 days about the severance package being offered and employees will get three weeks thereafter to decide whether to request layoff. Execs hope to accomplish all voluntary layoffs by June 1 and quickly follow up with any additional layoffs that might be necessary.
The move to slice payroll throughout Disney’s sundry operations, while coming amid souring economic conditions, also can be traced to corporate concerns over the conglom’s languishing stock price, which has dropped 30% over the past year.
Disney circulated copies of the Eisner-Iger letter to the press after the close of market trading. The stock had climbed $1.28, or almost 5%, to $29.20 in a broadly upbeat day on Wall Street.
(Paula Bernstein in New York and Charles Lyons contributed to this report.)