Exclusive: Disney looks for cost savings, ponders layoffs - sources

Mon Jan 7, 2013 6:36pm EST
 

By Ronald Grover

LOS ANGELES (Reuters) - Walt Disney Co started an internal cost-cutting review several weeks ago that may include layoffs at its studio and other units, three people with knowledge of the effort told Reuters, in an early sign that big companies may not be finished tightening their belts.

Disney, whose empire spans TV, film, merchandise and theme parks, is exploring cutbacks in jobs it no longer needs because of improvements in technology, one of the people said.

It is also looking at redundant operations that could be eliminated following a string of major acquisitions over the past few years, said the person.

The people did not want to be identified because Disney has not disclosed the internal review.

After years of repeated and sometimes severe cost cutting in the wake of the financial crisis, by last summer it looked as though Corporate America had trimmed all the fat and was back on the path of profits through operating growth. But news Disney is weighing cuts - on the heels of Eli Lilly and Co's warning last week that cost controls would drive earnings this year - could herald yet another wave of retrenchment.

Disney executives warned in November that the rising cost of sports rights and moribund home video sales would dampen growth.

"We are constantly looking at eliminating redundancies and creating greater efficiencies, especially with the rapid rise in new technology," said Disney spokeswoman Zenia Mucha.

In terms of profit margin, Disney's studio is the least profitable of the entertainment conglomerate's four major product divisions. The studio had a profit margin of 12.3 percent in 2012.   Continued...

 
Walt Disney Company Chairman and Chief Executive Officer Robert Iger announces Disney's new standards for food advertising on their programming targeting kids and families at the Newseum in Washington in this June 5, 2012 file photograph. Walt Disney Co, which reported record earnings in November, started an internal cost cutting review several weeks ago that may include layoffs at its studio and other units, three people with knowledge of the effort told Reuters. REUTERS/Gary Cameron/Files (UNITED STATES - Tags: ENTERTAINMENT BUSINESS LOGO EMPLOYMENT)