Disney to Reorganize U.S. Theme Parks, Eliminate Jobs
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.
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.