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In September, Disney Parks announced it would lay off 28,000 employees, two-thirds of whom are part-time, due to the effects of the pandemic on Disneyland and Walt Disney World. In the Walt Disney Company 10-K file, released the afternoon before Thanksgiving, Disney revealed what appears to be an updated figure that includes thousands of additional layoffs in its parks, experiences and products segment. .
“Due to the current climate, including the impacts of COVID-19 and the changing environment in which we operate, the Company has generated efficiency gains in its staffing, including limiting hiring to roles critical sales, time off and downsizing, ”the company said in the SEC filing. “As part of these actions, the employment of approximately 32,000 employees, primarily at Parks, Experiences and Products, will end in the first half of fiscal 2021.”
A Disney spokesperson confirmed that this figure includes previously announced layoffs at the parks. Separately, 37,000 Disney employees who should not be made redundant were on leave as of October 3.
It’s no secret that the coronavirus pandemic has hit the entire entertainment industry hard. Disney, in particular, has taken a hit in its many businesses, given its leadership at the box office, its extensive media network businesses and, of course, Disney parks and resorts around the world.
The entertainment titan detailed most of its financial woes in its fourth quarter earnings report two weeks ago, with revenue down 23% from a year ago to $ 14.7 billion and the company tipping towards a loss of $ 710 million (though still beating Wall Street forecasts). For the fiscal year, the current COVID-19 crisis had a negative impact of $ 7.4 billion on the company, which operated with a net loss in fiscal 2020.
While many of the impacts of the pandemic have already been well documented, 10-K described in detail the myriad consequences of the pandemic on the business.
This includes the closure of Disneyland in Anaheim, Calif., Since mid-March, as well as the limited closings (and reduced capacity reopens) of Walt Disney World, Disneyland Shanghai, and other resorts. Disney’s cruise ship fleet has been docked since the end of the second quarter and retail stores have been closed for months. Television and film production has been at a standstill for much of this year. With theaters closed, the company has canceled theatrical releases and sent some titles, like the live reboot of “Mulan”, directly to its Disney Plus streaming service.
These mutilated theatrical plans have resulted in success in its ad sales and merchandising licensing business, Disney said in the SEC filing.
“The impacts of COVID-19 could also accelerate the erosion of our historical sources of revenue in our media networking activities,” the company said.
With many live sports canceled and television production delayed, Disney’s television networks – which include ABC and ESPN – have suffered declines in viewership and advertising revenue, along with “requests for fee reductions.” affiliation related to some of our television networks. The company continues to pay certain sports fees, including delayed or canceled events. Pay-TV packages have seen an “accelerated decline” during the pandemic.
Even as television and film production has slowly started to pick up, Disney has “incurred costs to implement health and safety measures and productions will generally take longer to complete.” And getting theme parks back up and running does not guarantee attendance. Disney parks and resorts have seen a drop in demand since the doors reopened, the company said.
The impact of the crisis on consumers and business leaders is also being felt, as some fall behind on rents and start to tighten their portfolios.
“We have given rent waivers to some of our tenants, and they haven’t paid rent while some of our facilities have been closed,” the record read. “We have seen an increase in returns and refunds and customer deferral requests. Collectively, our impacted businesses have historically been the source of the majority of our revenue. “
Disney expects the financial toll from the coronavirus pandemic to extend at least until its 2021 fiscal year.
Like many companies struggling to contain the impact of the pandemic on their balance sheets, Disney noted in its 10-K that among the financial impacts, its debt ratings have been downgraded – and could be downgraded even further. ‘future – accordingly. It may also need to adopt all kinds of methods to cut spending, such as reducing investments in film and television content. In April, the company entered into an additional $ 5 billion credit agreement and noted in its fourth quarter earnings release that it would forgo its semi-annual dividend for the second half of the year.
“We can take additional mitigation actions in the future, such as mobilizing additional funding; not to declare future dividends; reduce or not make certain payments, such as certain contributions to our pension and post-retirement health insurance plans; further suspend capital spending, reduce investment in film and television content; or implement additional time off or reductions in effect, ”Disney said.
Despite all this, investors seem relatively optimistic about Disney as the company emphasizes its streaming efforts and realigns its corporate structures to focus on a digitally driven future. (See: Disney Plus’s 73.3 million paying subscribers in its first year on the market.) The company’s shares are trading at pre-pandemic levels, and chief executive Bob Chapek has expressed optimism in the company’s fourth quarter earnings report.
“Even with the disruption caused by COVID-19, we have been able to effectively manage our business while taking bold and deliberate steps to position our business for greater long-term growth,” he said .
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