SCROOGE AT DISNEY? COST-CUTTING MAY BRING HOLIDAY LAYOFFS.
Byline: Dave McNary Staff Writer
Employees of The Walt Disney Noun 1. Walt Disney - United States film maker who pioneered animated cartoons and created such characters as Mickey Mouse and Donald Duck; founded Disneyland (1901-1966)
Disney, Walter Elias Disney Co. are worried about something that would have been unthinkable a few years ago: that pink slips will arrive around Dec. 31 at the home of the Happiest Place on Earth.
The fear stems from the fact that despite a widespread cost-cutting program at the Burbank-based entertainment giant, Wall Street investors remain unimpressed and Disney management continues to look for more ways to reduce costs.
Even though the worldwide work force has remained steady at about 120,000 employees through this year, there are pervasive jitters jitters 'Butterflies' Psychology An episode of nervousness or anxiety that often precedes a public event; jitters is a type of performance anxiety which may affect actors in a stage production–stage fright or soloist musicians; it may respond to anxiolytics that further cost cutting will trigger widespread layoffs or the elimination of entire divisions, employees said this week.
``Nearly every single division has been hit, and everyone has been told to cut their budget by 10 (percent) to 20 percent,'' said one knowledgeable insider who spoke on condition of anonymity. ``Things are tight everywhere in the company.''
It's a rough time at Disney, which has a highly demanding, stressful corporate culture even during the best of times. The corporation's unique ability to deliver family entertainment has inspired strong loyalties, but the ongoing drumbeat See Drumbeat 2000. of negative developments has darkened dark·en
v. dark·ened, dark·en·ing, dark·ens
a. To make dark or darker.
b. To give a darker hue to.
2. To fill with sadness; make gloomy.
3. the outlook of employees who count Snow White and Mickey Mouse Mickey Mouse
Famous character of Walt Disney's animated cartoons. He was introduced in Steamboat Willie (1928), the first animated cartoon with sound. Mickey was created by Disney, who also provided his high-pitched voice, and was usually drawn by the studio's head animator, among their co-workers.
A Disney representative had no comment on questions about future layoffs or employee morale but noted, ``No major changes have taken place in terms of employee numbers.''
Nevertheless, it is startling star·tle
v. star·tled, star·tling, star·tles
1. To cause to make a quick involuntary movement or start.
2. To alarm, frighten, or surprise suddenly. See Synonyms at frighten. that employees at Disney - one of America's best-known and most-admired corporations - are even wondering about layoffs during the holiday season. Before the cost-cutting started, Disney already carried a reputation for being less likely than several of its rival entertainment conglomerates to spend lavishly on perks and parties.
The fact that Disney employees are worried about losing their jobs in December reflects not only how far the company's fortunes have fallen but also how enamored en·am·or
tr.v. en·am·ored, en·am·or·ing, en·am·ors
To inspire with love; captivate: was enamored of the beautiful dancer; were enamored with the charming island. Wall Street has become of layoffs as the best remedy for ailing corporations.
``It used to be that companies would not announce layoffs around the holidays, but that taboo has disappeared,'' said John Challenger, chief executive officer of the Challenger Gray Christmas outplacement out·place·ment
The process of facilitating a terminated employee's search for a new job by provision of professional services, such as counseling, paid for by the former employer. firm. ``Now the bottom line comes first.''
And Disney's bottom line hasn't been pretty. Wall Street has mostly shrugged in response to Disney's cost-cutting efforts this year with many brokers lowering their enthusiasm for the company's shares and numerous institutional managers selling at least a portion of their large stakes.
Challenger, for one, noted that companies with depressed stock prices often are forced to cut jobs just to appease investors. That's a key reason why total layoffs this year are up 11 percent over the 1998 level despite a booming economy.
``Stock price is the driving force of layoffs,'' he said. ``People have little choice when shareholder pressure begins to mount. If you can't meet expectations, you have to take action to get costs in line - and people are your No. 1 cost - because the drumbeat to cut costs is often deafening.''
Still, most experts doubt that Chairman Michael Eisner Michael Dammann Eisner (born March 7, 1942) was CEO of The Walt Disney Company from September 22, 1984 to September 30, 2005. Early life
Michael Eisner was born to a wealthy family in Mt. Kisco, New York, and raised on Park Avenue in Manhattan. will implement any kind of major layoffs. Eisner and his top executives presented a wide variety of cost-cutting strategies last month to Wall Street analysts without specifying significant job cuts.
``They basically said the goal was to save $500 million annually, but I would hate to speculate on where they might cut jobs,'' said Linda Bannister, an Edward Jones Edward, Eddie, or Ed Jones is the name of:
Another longtime Disney watcher said the corporation is unlikely to slash its work force.
``I would say that across-the-board cutting would be the last resort,'' said Steve Cesinger, managing director of Greif & Co. ``I don't believe that Eisner would want to be in the press heading up a major downsizing (1) Converting mainframe and mini-based systems to client/server LANs.
(2) To reduce equipment and associated costs by switching to a less-expensive system.
(jargon) downsizing . Disney is more apt not to replace people that leave.''
Short of targets
Cesinger said that does not mean there will be absolutely no job cuts but that they are likely to be targeted at poorly performing areas of the corporation.
``It depends on what area of the company you're in,'' he said. ``Any company that's short of its financial targets is going to be looking at cuts, so you have to figure out if you're in a key area.''
In late April, Eisner announced that Disney would undergo a corporatewide review of costs to shore up its finances. At that point, shares had fallen 23 percent in less than a year. But Wall Street has remained unimpressed; since then, they are down another 12 percent.
It's not as if Eisner has not been trying to cut costs at the company he has headed since 1984. Steps taken this year, some not officially confirmed, include:
Ending the practice of granting long-term employment contracts to many executives.
Imposition of a hiring freeze Noun 1. hiring freeze - a freeze on hiring
freeze - fixing (of prices or wages etc) at a particular level; "a freeze on hiring" for all positions except critical slots.
Ban on payment for overtime work.
No use of consultants and temporary workers.
Cutting annual spending on motion pictures by $500 million and letting dozens of development deals lapse.
Cutting jobs in the home video department and reorganizing the TV department.
Shuttering the five Club Disney Club Disney was a failed regional children's play center concept operated by Disney Regional Entertainment. Club Disney was billed as "imagination-powered playsite". The first Club Disney opened in Thousand Oaks, California. indoor play-parks and the three ESPN ESPN Entertainment and Sports Programming Network retail stores.
Putting the California Angels up for sale and pledging to not pursue high-price free agents.
Reducing head count by several hundred in cartoon animation, although those numbers fluctuate along with production cycles.
``There has been sort of a rolling layoff in animation since June, and they're trying to get crews to be staffed with fewer people,'' said Steve Hulett, business agent with Local 839 of the Motion Picture Cartoonists Union.
Profits down 30 percent
Disney reported in early November that its profits for its fiscal year ended Sept. 30 fell 30 percent to $1.3 billion, or 62 cents a share. Eisner said at that point he was ``disappointed'' by the results and warned investors not to expect growth for fiscal 2000.
At the Nov. 10 analysts' meeting, Eisner promised to reduce annual costs by more than $500 million, partly through ``strategic sourcing'' to cut purchasing expenses.
A month later, the stock remains stuck at about $28 even with several triumphs - blockbuster box office performance by ``Toy Story 2,'' a favorable agreement for a Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. theme park and surprisingly strong ratings for its ABC television ABC Television may refer to:
It's no wonder employees are worried even with economic times as good as they've been in a generation.
``If there ever was a good time to be out looking for Looking for
In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. a job, this is it,'' Challenger said. ``If someone loses a job at Disney, they're likely to have a valuable pedigree. Those people are going to find good new jobs.''