Disney to implement hiring freezes, job cuts to manage costs
Yahoo Finance's Allie Canal discusses Disney's cost-cutting measures and how 'Black Panther: Wakanda Forever' performed in its box office debut.
BRIAN SOZZI: Disney is looking to counter ballooning costs by preparing a targeted hiring freeze and job cuts, with CEO Bob Chapek warning of tough and uncomfortable decisions ahead. Yahoo Finance's Alexandra Canal joins us with the details. Allie.
ALEXANDRA CANAL: Hi, guys. Yeah, so it's been a rough week for Disney. We saw this miss on both the top and bottom lines, accelerated losses within the streaming division. $1.5 billion loss in Q4, and that followed a $1.1 billion loss in Q3. Disney says, look, Disney Plus, we're still on track to be profitable by 2024. How do you do that? Through cost-cutting measures. So CEO Bob Chapek, he wrote to division leaders on Friday. Yahoo Finance was able to obtain that company memo. And here's what we learned.
Number one, the company has established a call structure task force. Now, this will be headed by Disney CFO Christine McCarthy, General Counsel Horacio Gutierrez, and then Chapek. And these three individuals will be making those big objective decisions when it comes to cost management. And Chapek said that they've already undertaken a rigorous review of the company's content and marketing spending, so that's likely to change.
Chapek also warned of potential layoffs. He said, it's very likely that we're going to have to let people go as part of this effort-- and then hiring freezes. So this is something that we've really seen across the tech sector, along with media as well. And again, it's all in this effort to reach profitability by 2024. Management did guide that by the first quarter of 2023, losses should shrink by about $200 million. So that's something to look out for. But overall, I'm not surprised that we're hearing this from Disney at this point.
JULIE HYMAN: Yeah, it's interesting that there's a task force to cut costs.
ALEXANDRA CANAL: Right? It sounds very scary, in a way.
JULIE HYMAN: Well, but also, like-- well, you know, it's sort of creating another level of bureaucracy or something. Anyway, when we look throughout the company, where are the areas that are most likely to see kind of retrenching or layoffs or cutbacks of some kind? What are the sort of the weakest points?
ALEXANDRA CANAL: Well, I think right now the focus is on direct to consumer and within streaming. Of course, with Disney Plus, we have the advertising tier coming out next month. So that's something that they're hoping that they could add to profitability.
We saw them add users in the quarter, but that's clearly not enough. We have high content spend. We have these various macroeconomic challenges. That's obviously weighing on the advertising sector as well. So I think they're going to take a hard look across all of their streaming divisions, Disney Plus included, and really look at their content, strategize how much they need to be spending on these various different movies and TV shows. Do they need to focus on more Star Wars content or more Marvel?
Or perhaps, maybe we need to focus completely differently. Maybe we need to attract a new type of user onto the platform as well. So I'm curious to see what will come out of this. But definitely, things are going to change.
BRAD SMITH: Additionally, on the box office front, over the weekend, we had the much anticipated new "Black Panther" movie. That also debuted. How did it do? AMC CMO Adam Aron-- or CEO, excuse me, the chief ape, if you will.
JULIE HYMAN: Yes. He kind of is also the CMO, actually.
BRAD SMITH: Well, yes, yeah.
ALEXANDRA CANAL: Yeah, the tweet.
BRAD SMITH: Freudian slip, but still accurate there. So what do we see over the course of this one?
ALEXANDRA CANAL: Oh, he was definitely happy. I mean, that stock was up as much as 10% earlier today. Shares have pared back a little bit now but still up about 6%. But it was a big start for "Wakanda Forever." The movie pulled in $180 million domestically. That was above expectations. It still didn't reach what we saw in 2018 with the original "Black Panther." That debuted to a $202 million opening.
But the sequel, it had a little bit more going against it. It had a longer run time of 2 hours and 41 minutes. We had the untimely passing of Chadwick Boseman. There was some concern that the more casual moviegoer, people that really loved him in that role, could maybe be a little hesitant to return to the theater. But we clearly saw that that wasn't the case. We actually saw more women come to the movie compared to some other Marvel films. 47% identifying as female according to analytics platform intelligence. So that was something encouraging to see.
And then if you take a look at your screen now, those are the three biggest opening weekends since the start of the pandemic. "Wakanda Forever" makes that list, coming in third behind "Spider-Man, No Way Home" and "Doctor Strange in the Multiverse of Madness." So Marvel domination is alive and well. And I think the expectation is that we're going to see this film continue to do well, especially through the holidays. And then, of course, we round out with "Avatar, The Way of Water."
BRAD SMITH: It's great that you say that too. I've heard so many people say that they're going to go see this for Thanksgiving weekend. So you could see even more of a boost later on during this holiday season.
JULIE HYMAN: With their families.
BRAD SMITH: Exactly.
JULIE HYMAN: OK, you're the only one on set right now who's seen it, I believe. Soz, you didn't see it?
BRIAN SOZZI: Didn't see it.
JULIE HYMAN: Quick review, capsule review?
BRAD SMITH: Capsule review-- the women leads in this movie were amazing all throughout. I'd love to see the new, of course, technology that they talk about. And of course, it's all conceptualized because it is the Marvel Cinematic Universe, and MCU always dominates in that. But I think it comes down to the different theater experiences that people might see it in-- IMAX versus a 3D version. Even so, I don't know. I might actually go back and see this in IMAX.
JULIE HYMAN: You can do a twofer. Nice.
BRAD SMITH: Yeah, I'll do a twofer.
ALEXANDRA CANAL: Yeah, I think IMAX--
BRAD SMITH: Just for a different experience.
ALEXANDRA CANAL: --is the way to go too, just for the action scenes, the music, everything.
BRAD SMITH: I was sitting too close. I bought my tickets late, and so I was looking up like this the entire time.
ALEXANDRA CANAL: You got to get a massage after, Brad.
BRAD SMITH: Oh my goodness.
ALEXANDRA CANAL: Your neck is probably all torn up.
BRAD SMITH: I was not in the state for myself to be viewing a movie in that capacity.
JULIE HYMAN: OK, this is news I can use because I'm going to go see it this weekend. So I've got to get my tickets now to make sure that doesn't happen to me.
ALEXANDRA CANAL: Yeah.