Disney Considering Layoffs to Cut Costs

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Walt Disney Studios

Walt Dis­ney Studios

Lay­offs at the Walt Dis­ney Company’s stu­dios and other units may take place in the wake of an inter­nal cost-cutting review begun by the Mouse House sev­eral weeks ago, accord­ing to “three peo­ple with knowl­edge of the effort.”

Due to improved tech­nol­ogy, Dis­ney is pon­der­ing cut­backs in jobs that it no longer needs, one of the three told Reuters. It’s also exam­in­ing redun­dant aspects of its empire that could be eighty-sixed after sev­eral major acqui­si­tions over the past sev­eral years, the per­son added.

Although Dis­ney has used lay­offs to smooth oper­a­tions, staff cuts are not cer­tain at this point, the source added. The com­pany is con­sid­er­ing a hir­ing freeze instead of lay­offs, a sec­ond source said.

The sources requested anonymity because Dis­ney has not acknowl­edged the review publicly.

Disney’s stu­dio divi­sion is the least prof­itable of the enter­tain­ment giant’s four major prod­uct divi­sions, hav­ing had a profit mar­gin of 12.3% last year. Cuts will most likely take place at the stu­dio divi­sion, two of the three sources said.

The com­pany has changed its busi­ness prac­tices to make fewer films and depend more on such out­side stu­dios as Steven Spielberg’s Dream­Works. The stu­dio finances its own films, and pay­ing Dis­ney a mar­ket­ing and dis­tri­b­u­tion fee.

Tony Wible, an ana­lyst with Jan­ney Mont­gomery Scott, sug­gested that Dis­ney may cut jobs at the stu­dio and inter­ac­tive divi­sions, along with its music arm. His com­pany has a neu­tral rat­ing on Dis­ney stock.

This is not nec­es­sar­ily a neg­a­tive thing,” Michael Mor­ris, an ana­lyst with Dav­en­port and Co., said of the pos­si­ble lay­offs. “It speaks to a fis­cally respon­si­ble management.”

Though Mor­ris was unaware of the review, he has a buy rec­om­men­da­tion on the stock.

Dis­ney shares dropped Mon­day by 2.3% to close at $50.97.

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About Paul Anderson

Paul is an old-timer here at BCDB- his contributions go back to before the site! Paul is widely regarded as a Disney historian, and is also on staff at the Disney Museum in San Francisco. Paul is also a contributing historian for D23, the Disney Club. Paul has published several books and magazine articles on Disney history, too. You are welcome to drop Paul a line here.

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