Disney plans resorts reorganization, layoffs

The Walt Disney Co. announced a sweeping corporate overhaul Wednesday at its domestic resorts, with plans to combine back-office operations at Walt Disney World and Disneyland and eliminate an untold number of jobs.

In a memo to employees at Walt Disney Parks and Resorts, division Chairman Jay Rasulo said the corporate streamlining -- which will include merging "operating infrastructure" at Disney World and Disneyland under the leadership of Al Weiss, president of worldwide operations for Parks and Resorts -- has been accelerated by the nation's troubled economy.

"The long-term success of Parks and Resorts depends upon our ability to continue to adapt and innovate, to respond to ever-changing guest preferences, and to implement an organization and cost structure that meet today's economic realities," Rasulo said. "We must accelerate the evolution of our business and further refine our work structure to work in a more integrated and effective manner."

Disney, which employs about 62,000 people in Central Florida, would not say how many jobs will be eliminated by the move.

"Organization changes require difficult decisions, including the elimination of some roles," Rasulo said. "These decisions were not made lightly and we know this will be a challenging transition. These people are our friends and colleagues, and they have made valuable contributions."

 

Disney says it will cut jobs, consolidate operations

ORLANDO, Fla. — The Walt Disney Co. on Wednesday said it would eliminate an undisclosed number of jobs as part of a sweeping corporate overhaul at its domestic resorts, which includes plans to combine back-office operations at Walt Disney World and Disneyland.

Disney would not say how many jobs it intends to cut or how much money it expects to save through the moves. The company employs about 80,000 people at its U.S. resorts.

With the shakeup, Disney will consolidate East and West Coast "operating infrastructure" — responsibilities ranging from procurement to food and beverage to maintenance — under Al Weiss, the president of worldwide operations for Walt Disney Parks and Resorts.

The plans also call for uniting disparate creative engineering and business development units under single executives.

In a written statement, Disney said it was forced to speed up corporate streamlining plans by the worsening global recession, which has eroded revenue at its theme parks and elsewhere across the Burbank, Calif., company’s media-and-entertainment empire.

"These changes are essential to maintaining our leadership position in family tourism and reflect today’s economic realities," Parks and Resorts Chairman Jay Rasulo said in the statement.

In a separate memo to employees Wednesday, Rasulo wrote that "organization changes require difficult decisions, including the elimination of some roles.

"These decisions were not made lightly and we know this will be a challenging transition. The people affected are our friends and colleagues, and they have made valuable contributions," Rasulo added in the memo.

The announcement comes the same month Disney revealed that its first quarter profits fell 32 percent. Operating profit in the parks-and-resorts division fell 24 percent during the three-month period, which ended Dec. 27.
It also follows Disney’s decision last month to offer buyouts to more than 600 executives at its domestic resorts. A spokesman said Disney received "a satisfactory response" to the offer, though Disney declined to say how many executives took the buyouts.

John Gerner, managing director of Leisure Business Advisors, a Richmond, Va., consultant firm, said Disney will likely be able to make deep cost cuts by consolidating operations.

"I think it definitely has quite a lot of potential for savings. ... As far as the theme parks go, there’s definitely economies of scale in being able to merge all those operations together to the extent that they can and centralize them," Gerner said.

But Gerner said Disney, which relies on a constant infusion of fresh content to fuel everything from park attendance to DVD sales, must not cut too deeply in creative areas.

"They’ve got to be careful because there are so many very specialized people that work for Disney, especially on the creative side, that would be very difficult to replace once things turn around," Gerner said. "That’s what a lot of creative companies, not only Disney, have to rely on."

In addition to steering "operating infrastructure" at the Orlando and Anaheim, Calif., parks through Weiss, Disney said that its Walt Disney Imagineering unit would be reorganized into a single practice reporting to Bruce Vaughn, executive vice president and chief creative executive, and Craig Russell, executive vice president and chief design and project delivery executive. The company also said it would establish a new "Global Business Development team" headed by Executive Vice President Nick Franklin, which will be charged with combining existing business and real-estate development functions. The unit will be will responsible for focusing growth strategies at existing parks-and-resorts businesses and identifying new opportunities around the globe.

Vaughn, Russell and Franklin are all based in California.

Disney said other departments will make "appropriate changes" in the coming weeks.

As an example of what it hopes to achieve through the streamlining, Disney pointed to the simultaneous development of Toy Story Mania! attractions at both Disney’s Hollywood Studios in Orlando and Disney’s California Adventure in Anaheim, which helped hold down design costs.

The corporate overhaul means fewer employees will now report directly to Meg Crofton, president of Walt Disney World, and Ed Grier, president of Disneyland. But the two executives will continue to oversee the functions at their respective parks that deal directly with customers, employees and the local communities

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Disney to Reorganize U.S. Theme Parks, Eliminate Jobs (Update2)

By Andy Fixmer

Feb. 18 (Bloomberg) -- Walt Disney Co., the world’s biggest theme-park operator, is reorganizing its U.S. resort operation and cutting jobs to streamline decision-making and reduce costs.

The action consolidates oversight of parks in Southern California and Florida, Burbank, California-based Disney said today in an e-mailed statement. Al Weiss, president of worldwide operations, will lead the reorganization.

The moves were brought on by economic conditions, Disney Parks and Resorts chairman Jay Rasulo said in a statement. The company offered voluntary buyouts to about 600 parks-unit executives last month and extended discounts through Aug. 15 to lure visitors.

“We expect Disney to continue cutting costs so long as U.S. economic weakness persists,” Laura Martin, an analyst at Soleil Securities Corp. in Los Angeles, said in an interview.

Disney may postpone new attractions to lower spending further, said Martin, who rates the company “hold” and doesn’t own the shares. She expects the company to come up with additional promotions to bring visitors to its parks.

Disney fell 10 cents to $17.53 in extended trading. The shares lost 21 cents to $17.63 at 4:15 p.m. in New York Stock Exchange composite trading.

The company’s ABC network cut 200 jobs and eliminated 200 that hadn’t been filled. ABC’s TV studio and programming divisions are merging. ESPN, Disney’s cable sports channel, said it won’t fill 200 vacant positions, froze hiring through September 2010 and halted executive pay raises.

The company is making “significant” cost cuts at every division and will continue to make reductions, Chief Executive Officer Robert Iger said on a Feb. 3 conference call. The cuts go beyond responding to the economic downturn, he said.

“The worsening recession of 2009 gives companies the opportunity to reevaluate every business,” Martin said.

Theme-Park Results

Disney this month reported a 32 percent drop in fiscal first-quarter profit and said it would cut more jobs in response to the deepening U.S. recession.

Theme-park profit in the period declined 24 percent to $382 million on a 3.9 percent drop in revenue. Disney is offering three nights free and a $200 credit for food and merchandise with a four-night reservation in Florida and Southern California.

“We expect Disney to use creative marketing and promotions to drive park attendance, but at lower revenue per person,” Martin said.

To contact the reporter on this story: Andrew Fixmer in Los Angeles at afixmer@bloomberg.net

Last Updated: February 18, 2009 19:49 EST
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