The world’s biggest entertainment group Walt Disney sets to cease paying more than 100,000 employees as they continue to struggle due to coronavirus closures. They operate theme parks and hotels across the globe which includes the US, Europe, and Asia.
Disney to stop paying 100,000 employees due to coronavirus closures
According to the Financial Times, they are going to have to stop paying for almost half of their workforce. This way, they could save up to $500-million a month. The entertainment giant made an operating income of $1.4-billion for its parks, and merchandise in the last three months of 2019.
Although they set to stop paying them, the company will continue to provide full healthcare benefits for their staff who currently remain on unpaid leave. Disney also urged its US employees to apply for government benefits through the $2-trillion coronavirus stimulus package.
Disney Plus during coronavirus shutdowns
Disney, being in the travel and leisure sector, became one of the first companies to take a financial hit due to coronavirus shutdowns. Airlines have also struggled to survive with many American ones asking for financial assistance from the government.
Thankfully, the company has launched its online streaming site Disney Plus which became their fortune at a time like this. They have already reached 50-million subscribers in the first five months upon its launch. They enjoy huge boots as cinemas remain closed and people stay indoors.
Executive chairman gives up his entire salary
In March, Disney’s executive chairman Bob Iger has revealed that he would give up his entire salary during the pandemic. Iger remains one of the highest-paid executives in the entertainment sector. Last year, he earned $47.5-million as both chairman and chief executive. Iger reports that temperature checks of visitors will become the new normal routine along with bag checks when the theme parks reopen.
Why is Disney furloughing workers and other media giants aren’t?
Disney, Comcast, and AT&T are three of the biggest media conglomerates in the same category. Although they face similar challenges, the finances of their companies remain incredibly different. Disney’s Parks and Resorts remain its largest division, making up to 35% of its revenue in 2019 alone. That division not only has theme parks and resorts, it also has a cruise line.
In contrast, Comcast derived only 5.4% of its revenue from parks such as Universal Studios. Meanwhile, AT&T doesn’t own any parks. With Disney’s theme parks under closure, its profitability will likely be impaired for a long period of time. Of course, it will depend on the lingering effects of the pandemic.
This includes: economic recession, need for social distancing, new health precautions, and lack of travel and crowd aversion. With that said, Disney’s theme parks and hands in travel will remain the least profitable until there is a widely available vaccine.