Disney Parks laying off 28,000 cast members

[New Mouse]

That was a warning shot and certainly added to me questioning their dedication to CMs.

At the end of the day people tend to still look at corporations as if they are people. They arent. For the most part, corporations view the people that run them expendable. $ drives almost everything. Corporations have changed a lot as a whole since Dinsey was actually around.

 

[TheMaxRebo]

My point was: (obviously not written clear enough) that 9/11 primarily affected flying which affected tourism (and a lot more). The virus is not only a TRAVEL issue, but a HEALTH issue and a direct ECONOMIC issue (people losing jobs due to lockdowns) .. so potentially more reason the tourism industry is going to get hit hard by this and take longer to recovery.

There was a pretty big economic hit from 9/11 as well - it did bounce back relatively quick, and likely quicker than now though (but we shall see)

 

[RivShore]

From page 3 of the quarterly report found at "https://thewaltdisneycompany.com/app/uploads/2020/08/q3-fy20-earnings.pdf" we see that Parks and Resorts revenue is down 87% from a year prior. This division brought in 6.5 billion in the 3rd quarter last year, but less than 1 billion in the 3rd quarter this year. From the bottom of page 4 is this summation "We estimate the total net adverse impact of COVID-19 on segment operating income in the quarter was approximately $3.5 billion." The earnings report suggests there are more actions to come in an effort to stop the bleeding.

So their cash on hand would only last 6 months, and that's just to fund the parks losses. And for those that say go raise more cash, with $70B of debt already on the books, that will become expensive (or impossible) and could very well lead the company into a death spiral.

I will say again, there are no easy answers to this mess.

 

[AurumPunzel]

There was a pretty big economic hit from 9/11 as well - it did bounce back relatively quick, and likely quicker than now though (but we shall see)

The difference between 9/11 and COVID is that 9/11 was a security issue, and that was quickly addressed by changes to airport security and airline SOPs, with the latter also having the consequence of largely putting to an end hijack attempts like the one experienced on BAW2069 a year earlier, where a madman attempted to crash the flight by trying to take the controls and wrestling with the flight crew, which ultimately failed, and the crew were commended for their actions. COVID is a rapidly-evolving health threat that's already caused societal anxiety, and because of the fact that a fix is taking time to develop, it's not going to be as immediate a recovery as 9/11 had, not to mention that the scope for aviation industry consolidation isn't as great as it once was.

 

[Disney Bobby]

So their cash on hand would only last 6 months, and that's just to fund the parks losses. And for those that say go raise more cash, with $70B of debt already on the books, that will become expensive (or impossible) and could very well lead the company into a death spiral.

I will say again, there are no easy answers to this mess.

The operating costs for all the parks combined are about $10 billion a year. $23 billion cash on hand. WDW has been open, although generating less revenue. They could afford it for much longer than they are willing to do. And I refuse to believe that even if they had to borrow enough to keep these 28k employees on, 19k of which were part time, is going to put them in a death spiral. If so, who put them in such a fragile situation?

And if they are in such a fragile situation, they should have never have restored the full pay to executives and should have absolutely committed to NO bonuses of any type to ANYONE this year. Period. No way they could meet any goal set anyway, considering what has happened, unless they revise those goals. And that would really look bad. If they are going to ask CMs or others to suffer because of this, they should be willing to "suffer" with still-high reduced pay and no bonuses. That's not "the" answer, but it certainly is "part" of the answer.

 

[Starport Seven-Five]

The operating costs for all the parks combined are about $10 billion a year. $23 billion cash on hand. WDW has been open, although generating less revenue. They could afford it for much longer than they are willing to do. And I refuse to believe that even if they had to borrow enough to keep these 28k employees on, 19k of which were part time, is going to put them in a death spiral. If so, who put them in such a fragile situation?

And if they are in such a fragile situation, they should have never have restored the full pay to executives and should have absolutely committed to NO bonuses of any type to ANYONE this year. Period. No way they could meet any goal set anyway, considering what has happened, unless they revise those goals. And that would really look bad. If they are going to ask CMs or others to suffer because of this, they should be willing to "suffer" with still-high reduced pay and no bonuses. That's not "the" answer, but it certainly is "part" of the answer.

Parks are not their only business.

Executive salaries are a drop in the bucket in a company of this size. All cast members still employed are being paid full wages so why shouldn't the executives?

 

[New Mouse]

Parks are not their only business.

Executive salaries are a drop in the bucket in a company of this size. All cast members still employed are being paid full wages so why shouldn't the executives?

They shouldnt, there should be a sliding scale reduction in salaries across the board. 25% at the top down to 5% at the bottom. The numbers are random that I threw out there, but everyone should feel the burden on this....that is...if all cast members truly matter.

Its a cop out on leadership to take the approach they did.

As for the company going into a death sprial, there are others that are in much worse shape and have taken on additional debt without a problem. I dont think thats the solution but it is a solution.

 

[HashberryOTG]

The operating costs for all the parks combined are about $10 billion a year. $23 billion cash on hand. WDW has been open, although generating less revenue. They could afford it for much longer than they are willing to do. And I refuse to believe that even if they had to borrow enough to keep these 28k employees on, 19k of which were part time, is going to put them in a death spiral. If so, who put them in such a fragile situation?

And if they are in such a fragile situation, they should have never have restored the full pay to executives and should have absolutely committed to NO bonuses of any type to ANYONE this year. Period. No way they could meet any goal set anyway, considering what has happened, unless they revise those goals. And that would really look bad. If they are going to ask CMs or others to suffer because of this, they should be willing to "suffer" with still-high reduced pay and no bonuses. That's not "the" answer, but it certainly is "part" of the answer.

Anything they do effects stock price. If Disney's stock value drops too low, they become at risk for takeovers. Short term assets (such as cash) and confidence in the company are some of these. The executives, while they can agree to a salary decrease or bonus change, are under contract. Should they voluntarily give up their salaries or bonuses? I can't answer that, but good talent is hard to find. If these guys leave, stock price drops, risk of buyouts from other companies grows and Disney falls apart.

I understand layoffs suck (huge understatement). But they can't continue to keep paying people for jobs that simply aren't there right now. They need to make cuts. A shareholder isn't going to want to keep investing in a company that keeps spending $ with no return. It sends the message that management isn't capable of doing what needs to be done to ensure the company comes out the other side as strong as possible.

There is so much more involved in this mess of 2020 than CM jobs. I am greatly saddened that so many were laid off and I can only hope that someday some of them can return to these jobs they loved. But the parks aren't bringing in $10b a year right now, they've already borrowed at higher rates than normal and another loan would be under even less favorable terms. They are trying to get through to the other side as best they can, same as everyone else and every other business.

Clearly maintaining distancing in the parks (with capacity limits, lack of parades or live music, etc.) is a logistical nightmare I couldn't begin to figure out. But this is the agreement made with the state (no longer matters), what they think CM and visitors want, and the union (dunno what that contract says), so they have to abide by it.

 

[Disney Bobby]

Parks are not their only business.

Executive salaries are a drop in the bucket in a company of this size. All cast members still employed are being paid full wages so why shouldn't the executives?

Disney promotes itself as a different kind of company. All about getting tons of good publicity over equality and fairness and justice. They have reaped the benefits for the talk. Time for them to walk the walk.

I don't care about drops or buckets or any other talking points. Millions of dollars is life changing for people with nothing. These execs should do the right thing, and only temporarily only reducing their salary and still leaving HUGE bonuses on table is not fair. It's not equal. And it's not just.

 

[umichigan10]

oh for sure - plenty of people near me still aren't leaving their houses for anything, still getting everything delivered, etc. ... and then others are a bit more comfortable with some gatherings, etc.

I am somewhere in the middle, but the easing of restrictions in Florida makes me less likely to travel there, at least in the short term vs instilling confidence in me that "everything must be going great!"

Especially considering last time Florida said “everything’s gone, cmon down!” They ended up becoming the covid capital of the world. I know me personally it would make me much less likely to want to travel there in the foreseeable future

 

[Starport Seven-Five]

As for the company going into a death sprial, there are others that are in much worse shape and have taken on additional debt without a problem. I dont think thats the solution but it is a solution.

Disney is one of them:
https://www.latimes.com/entertainme...-coronavirus-crisis-shanghai-disneyland-china

MAY 12, 2020
9:58 AM
Walt Disney Co. has raised nearly $11 billion in new debt to weather the coronavirus crisis that has shuttered its theme parks and halted film and TV productions.
The Burbank entertainment giant disclosed the raise in a Tuesday regulatory filing. In a separate prospectus, Disney said the proceeds would be used for “general corporate purposes,” including the repayment of other debt.

 

[RivShore]

The operating costs for all the parks combined are about $10 billion a year. $23 billion cash on hand. WDW has been open, although generating less revenue. They could afford it for much longer than they are willing to do. And I refuse to believe that even if they had to borrow enough to keep these 28k employees on, 19k of which were part time, is going to put them in a death spiral. If so, who put them in such a fragile situation?

And if they are in such a fragile situation, they should have never have restored the full pay to executives and should have absolutely committed to NO bonuses of any type to ANYONE this year. Period. No way they could meet any goal set anyway, considering what has happened, unless they revise those goals. And that would really look bad. If they are going to ask CMs or others to suffer because of this, they should be willing to "suffer" with still-high reduced pay and no bonuses. That's not "the" answer, but it certainly is "part" of the answer.

Wow, I mean you have heard there's a pandemic right??

Absolutly no company had planned to be shut down for 6 months and at significantly lower revenue levels for possibly years. In fact, if a company had horded cash for such a disaster, they would be accused by shareholders and workers of not properly investing for the future.

 

[BadPinkTink]

Just a thought, everyone saying oh Disney should do this, Disney should do that, does anyone actually own and run a business?? Does anyone have a business qualification and actually understand the financial decisions being made??

Yes it is brutal whats happening now, but thats just business. I get that everyone loves the Disney Magic and the fuzzy feel good image. But in order for a company to survive in such a huge crisis as a global pandemic, a crisis that NO company from the mom and pop down the street to the huge multi national corporations such as Disney have any idea of how to cope with, theses brutal measures have to be done.

I get that we all love Disney, but maybe some people should see this as a teaching movement. THIS is what running a business is all about, crisis management and being able to make decisions for the good of the entire company without emotion. Running a business means being ruthless and cutthroat and looking after number one.

 

[WorldOfPooh]

Just a thought, everyone saying oh Disney should do this, Disney should do that, does anyone actually own and run a business?? Does anyone have a business qualification and actually understand the financial decisions being made??

Yes it is brutal whats happening now, but thats just business. I get that everyone loves the Disney Magic and the fuzzy feel good image. But in order for a company to survive in such a huge crisis as a global pandemic, a crisis that NO company from the mom and pop down the street to the huge multi national corporations such as Disney have any idea of how to cope with, theses brutal measures have to be done.

I get that we all love Disney, but maybe some people should see this as a teaching movement. THIS is what running a business is all about, crisis management and being able to make decisions for the good of the entire company without emotion. Running a business means being ruthless and cutthroat and looking after number one.

Really though Disney isn't doing all they could.

They should be reducing ticket prices and resort prices. Havin enticements for people to come back.
show that they care about the loyal customers and loyal cast.

But my feeling is they want to hold on to the prices and now lower them because they still hold on to the illusions of things going back to normal and don't want to lower prices but just keep them at the same level.

 

[Disney Bobby]

Wow, I mean you have heard there's a pandemic right??

Absolutly no company had planned to be shut down for 6 months and at significantly lower revenue levels for possibly years. In fact, if a company had horded cash for such a disaster, they would be accused by shareholders and workers of not properly investing for the future.

You are paid $65 million dollars for ONE year. It should have been somewhere on the radar, considering he did have a lesser version of this in 2009 while he was CEO.

Just sayin'.

 

[BadPinkTink]

Really though Disney isn't doing all they could.

They should be reducing ticket prices and resort prices. Havin enticements for people to come back.
show that they care about the loyal customers and loyal cast.

But my feeling is they want to hold on to the prices and now lower them because they still hold on to the illusions of things going back to normal and don't want to lower prices but just keep them at the same level.

and this just proves my point.... looking at the situation from a FAN point of view instead of from a business point of view. Armchair fans looking at things from the outside.

THIS is why Bob Chapek, Christine McCarthy and the other high executives are paid the big money, to make these emotionless brutal decisions to ensure that the company survives. Like it or not, CM's are just a number, its the investors are whats important. To ensure that in 12, 18 months TWDC still exists, that WDW and DL and the international parks do not close, to ensure that DCL can resume sailing, that Disney+ can stay online cuts have to be made.

Its survival of the fittest right now, and all these 28000 redundancies are to make sure that in 2023 TWDW is still able to operate.

 

[RivShore]

You are paid $65 million dollars for ONE year. It should have been somewhere on the radar, considering he did have a lesser version of this in 2009 while he was CEO.

Just sayin'.

No executive of any company can be expected to have though of this massive impact from something completely beyond their control. In the history of the company, they have only experianced shutdowns of a day or two for natural disasters.

And again, if they did anticipate this, and they stopped all investment in the parks and stopped all additional hiring to horde cash, I am certain, you, everyone on this site, shareholders, and workers would have all been complaining.

Come on, you would be OK with the parks looking exactly as they did 10 years ago while Iger hoarded cash for the company? That means the same coat of paint, no Pandora, no TSL, no GE, no MK and Epcot upgrades, just a pile of cash on the balance sheet for that possible pandemic, alien invasion, etc.

 

[rteetz]

Really though Disney isn't doing all they could.

They should be reducing ticket prices and resort prices. Havin enticements for people to come back.
show that they care about the loyal customers and loyal cast.

But my feeling is they want to hold on to the prices and now lower them because they still hold on to the illusions of things going back to normal and don't want to lower prices but just keep them at the same level.

They have no need to do that right now.

 

[Douglas Dubh]

Especially considering last time Florida said “everything’s gone, cmon down!” They ended up becoming the covid capital of the world.

Florida didn’t say that. And they still have fewer deaths per capita than a lot of states, so I’m not sure how it can be considered the COVID capital of the world.

 

[New Mouse]

They have no need to do that right now.

Im not sure they even know what they want right now. Universal has gone the way if filling the park to capacity any way it can to get new money in the door. Disney cant seem to make up their mind.