Anna Nicolaou in New York and Alex Barker in London printed this page yesterday 271 As the world’s largest entertainment company tried to overcome the coronavirus blockade, Walt Disney Zhou will stop paying more than 100,000 employees, accounting for half of its total employees.
Suspending the payment of the salaries of thousands of so-called actors will save Disney up to $500 million per month in its theme parks and hotels, which have been closed for nearly five weeks in Europe and the United States. However, compared with other theme park owners (such as NBC Universal and Warner Media), the way to cut fixed costs is stricter, which poses a significant reputational risk to the century-old empire behind Mickey Mouse.
This decision forced Disney employees to rely on state government benefits-public support could reach hundreds of millions of dollars in the next few months, despite the company’s protection of executive bonus programs and the $1.5 billion dividends due in July.
In contrast, some large multinational companies, including L’Oréal and Total, have vowed to abandon state aid in support of taxpayers. Disney has increased its debt and signed new credit arrangements in the past month, allowing the company to have about $ 20 billion in new cash that can be used to cope with the economic downturn. Rich Greenfield, a BTIG analyst, said: “They can afford it (rather than firing employees).” However, he cautioned that Disney might be prepared to “close for a very long time.” Disney has earned nearly $ 7 billion in operating income from its parks, experience, and services.
Last year, the company’s product business accounted for about half of all operating profits. Since the outbreak of the virus, Disney’s stock price has fallen by a quarter.
Alexia Quadrani of JP Morgan Chase said: “Since labor accounts for about 45% of operating expenses and 33% of total expenses, we can save a lot of money.” He estimated that vacations and other Cost-cutting measures will save Disney about $ 500 million a month. Disney will provide full health care benefits to employees on unpaid leave.
Starting on April 19, it urged employees to apply for an additional $ 600 in federal support through the 2 tons of coronavirus stimulation program per week. In Orlando, which has more than 70,000 Disney actors, Florida provides unemployment benefits up to $ 275 per week for 12 weeks, the lowest in the United States.
The salary of most of the 17,000 employees at Disneyland Paris will also stop, and these employees will be included in France’s “partial activity plan”. This allowed the company to reduce working hours or vacation workers, while the government paid 84% of the net salary.