News Bob Iger outlines the need to transform the Walt Disney Company resulting in 7000 job losses and $5.5 billion in cost savings

[Dranth]

Everyone keeps saying these things don’t scale. Why wouldn’t it? The same basic concepts apply whether it’s a small business or a large business. Large business have appropriately so…. More employees. So it costs them more money to make everyone happy with their income.

Have you ever heard of a situation where people feel like they don’t deserve more pay? Of course people want more. Whether or not they get it is a different story.

To a point yes but the profit margin on large corporations is often much higher than a small business so they very much could afford to pay more.

 

[lazyboy97o]

This is an eloquent post and I don’t disagree with much of it. I think to a certain extent we’re speaking at cross purposes because we’re simultaneously discussing small businesses and mega corps like Disney, and arguments and examples don’t necessarily scale.

I think this is the issue that really gets missed when discussing Disney. There absolutely is a point where the scale of the operation changes the requirements of the job beyond the base skill that is being assessed. Having a few true part time needs at a store isn’t the same as needing to fully staff a store for 12+ hours a day, 365 days a weeks. Everybody focuses on the base task and ignores the other demands. When you need people who can have wide availability and able to work full shifts or longer, you’re well past the point of having a job that can be filled by students. Add in a remote location and poor public transit and you now need people who can afford to own and operate a car. Tasks at Walt Disney World may be performed at other businesses by part timers, students, retirees, etc. but the other requirements far exceed what those groups can provide and the competition for labor is growing.

 

[Jrb1979]

To a point yes but the profit margin on large corporations is often much higher than a small business so they very much could afford to pay more.

Yes that's true. I work for a major retailer that's a public company. They have no issue paying us on average $24 an hour with a bonus starting at $6000 a year and tops out at $10000 a year after 20 years of employment. Other then not having as many employees as Disney, most of the jobs we have are entry level. It's why I don't get why all publicly traded companies can't pay more. I'm not saying to pay as much as where I work but somewhere in the middle

 

[Drdcm]

Yes that's true. I work for a major retailer that's a public company. They have no issue paying us on average $24 an hour with a bonus starting at $6000 a year and tops out at $10000 a year after 20 years of employment. Other then not having as many employees as Disney, most of the jobs we have are entry level. It's why I don't get why all publicly traded companies can't pay more. I'm not saying to pay as much as where I work but somewhere in the middle

To a point yes but the profit margin on large corporations is often much higher than a small business so they very much could afford to pay more.

FWIW, I’m not saying the employees don’t deserve more money.

I’m just saying it does scale, and with the added headache of having to appeal to the shareholders.

@Jrb1979 Your company sounds like a nice one. I’m glad it does what it does for its employees.

 

[SpectroMagician]

Disney will continue to do poorly until they remember Walt's words that "quality will win out". They stopped trying to be the best in the business with quality experiences and instead started pushing an agenda. This agenda runs counter to so many things that made Disney great, and until they fully reject that and get back to caring about quality they will continue to suffer financially.

 

[MAGICFLOP]

I really appreciate your post. I first started visiting WDWMagic in 2000 and it's interesting to see the experts that reside on the boards and the internet for that matter. I've been the owner of a company for twenty five years and I've served on non-profit boards. It's simply incredible to see how the world is now filled with keyboard warriors who are experts in everything. It belittles the expertise of those who have such in any given area or field. That's quite the personal pet peeve of mine. I just had a conversation with a really good friend of mine that served on a board with me and even in that situation, it's incredible to see unqualified people in important roles make decisions based on emotion rather than logic and what is best for the organization. The bottom line is that on this executive committee, we had someone that wanted things done regardless of the fiscal impact to the organization. The board voted against her every time and she would go ballistic. On our board, it included two extremely well qualified folks in finance including a director, board member, and vice president at a major regional bank. The expertise that they possessed was literally priceless, but someone being in their feelings brought chaos. It reminds me of much of the commentary from people today who have no idea of what they're speaking of.

While I as a consumer can view the pricing structure at the Disney theme parks as out of bounds or too extreme, I with my business hat on understand that the division is highly profitable, and it is now the core engine of the company to help cover for areas that are bleeding such as over the top video along with a legacy broadcast model that is in decline.

Below the blank line you become what you preached about above.. LOL

 

[MAGICFLOP]

*Everyone* is a greedy, devious, disloyal layabout who needs to be constantly incentivized to do their basic job.

Workers are supervised by managers. Managers are supervised by executives. Executives are supervised by boards of directors, but boards of directors aren't there every day because they're off running their own organizations. Boards of directors are supervised by shareholders, who are ultimately the highest authority in the company. Because the boards of directors are not actively involved in managing the business, they design executive compensation packages to align executive self-interest with shareholder self-interest.

The best way to make management care about the shareholders is to make managers shareholders.

People in here don't get the logic, they would rather go on emotional virtue of the CEO getting knocked down to minimum wage and 1k bonus and only lay off 6900 people.
My company does an employee survey and one of the questions was " Do you feel you should get a share of the profits each year?" My answer was 'No, I get paid a guaranteed salary, no matter if the company makes or loses money" My incentive to keep my job is to do my share the keep the company profitable. During COVID we lost money, people only see the virtue of sharing the profits, what about losses? sharing loses is not virtuous.. should these profit taking employees get hit with a bill for their share in a bad year? this type of employee is called an owner and they take the risk and get the rewards..

 

[jnasty]

Bob Iger outlines the need to transform the Walt Disney Company resulting in 7000 job losses and saving more than 5 billion dollars

Bob Iger outlines the need to transform the Walt Disney Company resulting in 7000 job losses and saving more than 5 billion dollars

www.wdwmagic.com

Based on the numbers, those 7000 workers would be making $235k/yr on average.

 

[HauntedPirate]

What happens to the price of something when you double the supply?

In theory, it drops by half. Right now, the price may drop, but not by half. Things is outta whack.

 

[FigmentFan82]

As I said, I'm talking about "common parlance," not nitpicking technicalities.

9 times out of 10, people writing or talking about Disney+ call it a DTC service, not an OTT service.

OTT is often used in the context of something that was formerly distributed via linear television. For example, if Disney were to let you buy ESPN without a cable package, they might refer to it as buying ESPN OTT ("the top" in this context being the legacy MVPDs like Comcast).

It's not nitpicking, it's simply stating that there is a big difference and they are not simply interchangeable, even if one gets used a lot in describing a specific service. My company works in the retail space selling their own products. Our website is referred to internally as our DTC platform. Amazon is not since they sell on behalf of us and we are not directly interacting with the consumer. ShopDisney is DTC but it is not OTT

 

[hopemax]

In theory, it drops by half. Right now, the price may drop, but not by half. Things is outta whack.

Not always. If supply for a product was 2000 and the demand was 20,000, then doubling the supply to 4000, is going to do very little to the price. The price will go down only if there are an inadequate supply of buyers at the given price.

Also, in some cases increasing the supply increases the price point because more people are also becoming aware of the product. Someone making a small quantity for a local market who decides their product is strong enough to go regional or national, may start increasing production, as well as their marketing, online infrastructure, etc. In this new supply / demand environment a higher price point might be sustainable.

IMO, a bunch of our issues are due to the assumption that if there is outsized demand someone would step in to meet it, and I don't think that happens as much as it should for reasons that are off-topic to this forum.

 

[TP2000]

7K layoffs of a team of 200K cast members makes bigger news than Yahoo recently announced layoffs of 20% of company.

Well, at least 75,000 of those CM's are hourly (and many union), and thus unaffected by these layoffs.

How many hourly ride operators and hotel housekeepers and cruise line towel boys does Yahoo employ? I'd imagine zero. There's likely very, very few hourly employees at Yahoo, as I imagine even stuff like office custodial and food service is outsourced to other companies at Yahoo office complexes.

This poses an interesting question. How many of Disney's global employees are hourly, front-line CM's in the Parks division? Off the top of my head it's at least 75,000 in Anaheim, Paris and Orlando combined. Does Tokyo count in their global CM total? Communist China?

I'm going to see if I can find some numbers on how many salaried folks Disney employs at its major business complexes in Burbank, Glendale, Anaheim, Orlando, NYC, and Bristol CT. Because it's those white collar office buildings that will be losing the 7,000 jobs. It's not the churro salesmen and Jungle Cruise Skippers around the world. The layoffs are out back in the office building full of cubicles.

 

[TP2000]

Based on the numbers, those 7000 workers would be making $235k/yr on average.

No, the average salary would be about two-thirds of that number. Or an average salary around $160,000. About a third of the cost of employing each person is paid for by a company in benefits, 401K matches, payroll taxes to the government, administrative costs, etc.

The pre-tax salary of those 7000 layoffs is around $160,000 per year on average, taking those business costs into consideration.

 

[TP2000]

7K layoffs of a team of 200K cast members makes bigger news than Yahoo recently announced layoffs of 20% of company.

Okay, so on the issue of how big losing 7,000 salaried folks is for Disney in comparison to the tens and tens of thousands of CM's they have that are hourly in the Parks division, what if we did this to get a better answer to the good question "How many is 7000 really?"...

After doing a bit of Google, it's nearly impossible to pull the hourly CM totals out from the total CM totals at each Disney Parks property. But, the media does an excellent job of reporting on the current totals of CM's working in the American parks, and the foreign parks seem to have decent data available too.

So what if we assumed that 20% of the CM's working at Parks properties were salaried, and thus potentially a lay off candidate? I actually think it's probably closer to 10% or 15% of the total being salaried at the Parks properties, but lets be bold and say it's 20%. That would include the Dockers-clad managers in the parks, the senior managers, the PR folks, the Vice President of Guest Arrival Experience in Anaheim (actually a real title!), plus the various technical CM's that work in engineering, IT, HR, etc.

20% of the CM's working at each Disney Parks property/division around the world gets you these numbers as of early '23:

Disneyland Resort = 34,000 CM's. 6,800 Salaried, 27,200 Hourly.
Walt Disney World = 77,000 CM's. 15,400 Salaried. 61,600 Hourly.
Disneyland Paris = 17,000 CM's. 3,400 Salaried. 13,600 Hourly.
Hong Kong Disneyland = 7,000 CM's. 1,400 Salaried. 5,600 Hourly
Shanghai Disneyland = 10,000 CM's. 2,000 Salaried. 8,000 Hourly
Disney Cruise Line = 15,000 CM's. 2,300 Salaried. 12,700 Hourly
Disney Vacation Club = 10,000 CM's. 2,000 Salaried. 8,000 Hourly

Those seven major employment properties/locations of the Parks Division employ 136,700 hourly CM's. Most of whom are front-line CM's we all know and love as Skippers and Mousekeeping and Waiters and Custodians and such. None of whom are subject to these layoffs. I didn't include Tokyo Disneyland Resort in this total, cause only God and Ron Miller know how the accounting on that licensing agreement works.

So if you back out 136,000 hourly front-line Parks Cast Members out of the total of 220,000 employees who work globally for the Walt Disney Company in '23, that gets you a total of 84,000 people, many of them salaried, who are subject to being a victim of the 7,000 looming layoffs.

7,000 out of 84,000 is 8.3% of the salaried/hourly-technical workforce at Disney that will be cut.

Even if this math is off by 10% or so, I think I just earned myself a Friday evening cocktail in a couple hours!

 

[TP2000]

Put another very simplified way, if you spread 8.3% out across the salaried ranks in Orlando and Anaheim, you get these figures if 20% of their total site workforces are salaried:

Disneyland Resort = 6,800 Current Salaried CM's, 564 Layoffs
Walt Disney World = 15,400 Current Salaried CM's, 1,278 Layoffs

If only 15% of the total site workforce is salaried in Anaheim and Orlando, you get these figures:

Disneyland Resort = 5,100 Current Salaried CM's, 423 Layoffs
Walt Disney World = 11,500 Current Salaried CM's, 954 Layoffs

 

[Lilofan]

Put another very simplified way, if you spread 8.3% out across the salaried ranks in Orlando and Anaheim, you get these figures if 20% of their total site workforces are salaried:

Disneyland Resort = 6,800 Current Salaried CM's, 564 Layoffs
Walt Disney World = 15,400 Current Salaried CM's, 1,278 Layoffs

If only 15% of the total site workforce is salaried in Anaheim and Orlando, you get these figures:

Disneyland Resort = 5,100 Current Salaried CM's, 423 Layoffs
Walt Disney World = 11,500 Current Salaried CM's, 954 Layoffs

Nice figures but I think it is 7K layoffs for TWDC not just parks and resorts figures you posted.

 

[TP2000]

Nice figures but I think it is 7K layoffs for TWDC not just parks and resorts figures you posted.

Those figures don't add up to 7,000. Not even close. Those are the figures if the Parks division has to cut 8.3% of its salaried workforce as its share of the 7,000.

7,000 jobs out of the 84,000 salaried jobs that TWDC currently has globally is 8.3%.

Because Parks is one of the few big divisions actually making net income, it may be asked to cut less than 8.3% of their salaried workforce. But that is something we don't know yet, until the figures are released by the various state labor boards.

The most important point is that out of the 220,000 employees that Disney has globally, around 136,000 of them are just hourly CM's working the parks and cruise ships and timeshares in polyester uniforms. Those 136,000 hourly CM's aren't subject to these 7,000 layoffs..

 

[Lilofan]

Those figures don't add up to 7,000. Not even close. Those are the figures if the Parks division has to cut 8.3% of its salaried workforce as its share of the 7,000.

7,000 jobs out of the 84,000 salaried jobs that TWDC currently has globally is 8.3%.

Because Parks is one of the few big divisions actually making net income, it may be asked to cut less than 8.3% of their salaried workforce. But that is something we don't know yet, until the figures are released by the various state labor boards.

"Cost reductions will be comprised of approximately 50% marketing, 30% labor, and 20% technology procurement and other expenses"

3500 marketing jobs cut out of the 7000 to be laid off? Am I reading this correctly ?

 

[TP2000]

3500 marketing jobs cut out of the 7000 to be laid off? Am I reading this correctly ?

No. That confused a few folks at first the way it was typed out.

It's referring to the total $5.5 Billion in cost savings. 50% of that $5.5 Billion will be coming from slashed marketing budgets (buying fewer TV commercials and cancelling schmoozy premiere parties), 20% of it will be due to slashed budgets for technology procurement (not buying new computers and stuff), and 30% will be due to "labor" which means layoffs and a reduction in staffing levels companywide.

The 30% savings in labor is where you get the $1.65 Billion in saved labor costs from 7,000 layoffs companywide, or roughly an average pre-tax salary average of $160,000 per salaried employee laid off.

 

[MagicHappens1971]

Disney will continue to do poorly until they remember Walt's words that "quality will win out".

This post was good, until here.

They stopped trying to be the best in the business with quality experiences and instead started pushing an agenda. This agenda runs counter to so many things that made Disney great, and until they fully reject that and get back to caring about quality they will continue to suffer financially.

Disneys “agenda” that you’re referring to, I’d assume Is the “woke-Disney”. Disneys agenda is making more money and making the shareholders more money, pleasing the board, etc. That “agenda” is at fault for the parks not getting proper maintenance funds, for not properly expanding capacity within the theme parks, etc.
DMED is loosing money because of Disney+.