Disney: Mickey Mouse To Lay Off Thousands
Disney's new CEO is slashing thousands of jobs across the company's most beloved divisions, and the culprit is not the AI takeover everyone feared. The real threat to the House of Mouse runs much deeper than technology.
The world’s largest entertainment companies have problems. Most cost too much to run, at least to give investors returns. People across America feel their bank accounts shrinking and, with it, discretionary spending. Streaming has lost its luster, as the industry leader, Netflix (NASDAQ: NFLX | NFLX Price Prediction), faces what are called headwinds. Movie making was always a hit-or-miss proposition. Disney (NYSE: DIS), feeling the pain, will lay off thousands from its 231,000-strong workforce. For once, it appears, AI is not the cause.
Bloomberg reports that the layoffs will be across the board. But theme parks (the company’s earnings engine) and TV will get hammered particularly hard. Management has targeted 20% in cost savings, which seems impossible for a company this large. However, when executives think they can cut their way to success, they reach for unprecedented measures
New CEO Josh D’Amaro has to show investors and his board that he was the right person for the job. Disney’s stock is down 35% in the last five years, while the S&P 500 is up 61%. So far this year, the stock is flat while the S&P is 10% higher.
Disney management is watching the competition to help steer its plans. Industry streaming giant Netflix is in trouble. Comcast (NASDAQ: CMCSA) has torn itself into pieces, with NBCUniversal going one way with TV content, movies, and TV stations. The newly formed Versant gets several TV channels.
Disney really has no rivals in the theme park business because of its size. However, it is sensitive to consumer spending, which is down by most measures.
And newly formed Skydance (NASDAQ: SKYD), created by a huge investment by the Ellison family of Oracle fame and massive debt, owns everything from CBS to CNN to Warner Bros. Management has said that the merger that created it will drive “synergies,” which always means massive layoffs.
Disney really isn’t in any great business other than theme parks. D’Amaro can sense a recession on the horizon. Even if consumer spending pulls back some, theme parks will take a hit.
For once, AI has not taken jobs. Mickey Mouse has.
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