Disney Announces Second Round of Layoffs as COVID-19 Woes Persist for Entertainment Giant

Walt Disney Co, one of the world's largest entertainment companies, is facing a major crisis due to the impact of the COVID-19 pandemic on its businesses. The company has announced that it will begin a second wave of layoffs on Monday, April 24, 2023, as part of its efforts to eliminate 7,000 jobs and save $5.5 billion in costs, according to sources familiar with the matter.

The company will cut "several thousand" jobs through Thursday, April 27, 2023, with the latest round of reductions bringing the total number of jobs culled to 4,000, Disney officials say. The cuts will occur across the company's business segments, including Disney Entertainment, ESPN and Disney Parks, Experiences and Products, according to the sources, but are not expected to affect hourly frontline workers employed at the parks and resorts.

An internal memo seen by Reuters said the layoff notices will continue over the next several days. "The senior leadership teams have been working diligently to define our future organization, and our biggest priority has been getting this right, rather than getting it done fast," Disney Entertainment co-chairmen Alan Bergman and Dana Walden wrote in the memo to staff. "We recognize that it has been a period of uncertainty and thank you all for your understanding and patience," they said.

Disney announced its layoff plan in February 2023, together with a reorganization that returned decision-making to its creative executives. Its goal is to create a more streamlined approach to its business. The entertainment industry has retrenched since its early embrace of video streaming, when established media companies lost billions as they launched competitors to Netflix Inc. Media companies started to rein in spending when Netflix posted its first loss of subscribers in a decade in early 2022, and Wall Street began prioritizing profitability over subscriber growth.

On March 27, 2023, Disney began notifying employees affected by the workforce reductions, and said a second, larger round would follow in April. A third round is anticipated before the start of summer.

The layoffs are a devastating blow for Disney's employees and fans alike. The company is known for its iconic brands and franchises such as Mickey Mouse, Marvel, Star Wars and Pixar. It also operates theme parks around the world that attract millions of visitors every year. However, the pandemic has severely disrupted its operations and revenues. The company reported a net loss of $2.8 billion for its fiscal year ended October 2, 2021, compared to a net income of $11.6 billion for the previous fiscal year. Its revenue fell 6% to $65.4 billion in fiscal 2021 from $69.6 billion in fiscal 2020 .

The company has tried to adapt to the changing consumer preferences and behaviors by investing heavily in its streaming service Disney+, which launched in November 2019. The service has been a bright spot for Disney amid the pandemic, as it attracted more than 200 million subscribers worldwide as of March 2023. However, Disney+ is still not profitable and faces stiff competition from other streaming platforms such as Netflix, Amazon Prime Video and HBO Max. Recently Disney's president of streaming entertainment Michael Paull left the company amid major restructuring

Disney's CEO Bob Chapek said in February that the company is optimistic about its future prospects and expects to return to growth in fiscal 2022. He said that the company is focused on creating high-quality content for its streaming and theatrical platforms, as well as reopening its parks and resorts safely and responsibly. He also said that the company is committed to supporting its employees and communities during this difficult time.

However, some analysts and experts have questioned whether Disney's layoff plan is enough to address its financial challenges and whether it will affect its ability to innovate and compete in the long term. Some have also criticized Disney for cutting jobs while paying dividends to its shareholders and bonuses to its executives .

Disney's layoff plan is a sad reminder of how the pandemic has changed the landscape of the entertainment industry and how even the most successful and beloved companies are not immune to its effects.