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Disney: The Place Where Dreams of Mass Layoffs Come True for Investors

Disney recently announced it is laying off 7,000 workers, caving to pressure from its profit-seeking shareholders.

Hundreds of Disney workers march along Maingate Lane and U.S. Highway 192 in Kissimmee, Florida, on November 30, 2022.

For Disney workers, the “Magic Kingdom” is quickly losing its magic.

The company recently announced that it was laying off 7,000 workers to cut operating costs, pulling the rug out from under thousands of employees who had dedicated themselves to their work at Disney.

The layoffs were praised by the business community, including the billionaire hedge fund investor Nelson Peltz, who had been aggressively pushing for Disney to slash costs and restore dividend payouts to shareholders. CEO Bob Iger assured analysts that he did “not make this decision lightly” but in the end he opted for mass layoffs.

Meanwhile, at Disney World in Orlando, Florida — the biggest single-site employer in the U.S. — workers have been battling management as they try to negotiate a new union contract. Workers recently rejected Disney’s offer of a $1 first-year raise by a whopping 96 percent, demanding $3 instead.

All this comes against the backdrop of soaring inflation and rising rents that Disney World workers say have eaten away at the purchasing power of their pay — not to mention repeated instances of customers assaulting cast members.

Even Abigail Disney, the granddaughter of company cofounder Roy O. Disney, says inequality at Disney has gone too far. “Nelson Peltz needs to be gratified by less money,” she told Truthout, adding that Disney and other corporations need to do better by their workers.

Wall Street Strong-Arms Mass Layoffs at Disney

Toward the end of 2022, Disney was mired in problems. The company’s stock plummeted 44 percent throughout 2022, which many analysts blamed on bloated streaming services that were gaining subscribers but losing revenue. Disney’s market cap fell from $260 billion in January 2020 to $167 billion by November 2022 — a 36 percent decline. The company had suspended its dividend payouts to shareholders. In November, the nearly three-year reign of Bob Chapek as CEO ended in disappointment as Bob Iger, who led the company from 2005 to 2020, returned for a two-year stint to help correct course and plan a succession.

Enter Nelson Peltz.

Peltz is the billionaire head of Trian Partners, a New York-based hedge fund that has a long history of activist investing in big, public-facing companies like Domino’s Pizza, Family Dollar and Procter & Gamble. He goes after corporations that are vulnerable and tries to invest — and elbow — his way into board seats that he uses to push companies to restructure to the benefit of shareholders.

To say the least, Peltz is a controversial figure. He’s long been an arch-rival of the Coalition of Immokalee Workers (CIW), the well-known human and farmworker rights organization. Trian is the top shareholder at Wendy’s and Peltz chairs the company’s board. Wendy’s has been a rare holdout in joining the CIW’s celebrated Fair Food Program, and the group has protested Peltz for years.

Moreover, as reported in Truthout, Peltz was a major backer of Donald Trump, personally hosting a lavish, $10 million fundraiser for Trump’s reelection at his $136.4 million Palm Beach estate. The two are neighbors and friends and have praised each other in public.

On top of all that, Peltz is rumored to be personally ruthless. One exposé called his Westchester estate a “house of horrors” for workers — where, for example, one butler allegedly was forced to scrub a toilet seat four times after a single drop of urine was discovered — and Peltz is currently suing his daughter’s wedding planner for $189,000 (about .0001 percent of the billionaire’s reported net worth).

“Right now, Disney’s business plan is, we can’t make a profit unless people suffer…. Go back to the drawing board and think of another way to do it.”

When Peltz saw Disney struggling, he made his move.

The octogenarian billionaire announced he was seeking a board seat at Disney and lambasted the company’s “primarily self-inflicted” problems while proposing to “eliminate redundant and/or excessive costs” and “reinstate the dividend by FY 2025” — code words for restructuring to boost shareholder payouts.

Peltz reportedly has a $1 billion stake in Disney, and he was backed by billionaire Marvel Chair Isaac Perlmutter, who might own about 1 percent of the company. Peltz was also taking to the airwaves to amp up pressure on Disney.

It was a nightmare situation for Iger, who surely did not want Peltz on Disney’s board breathing down his neck.

Then, on February 8, came the announcement from Disney of a mass layoff of 7,000 workers — around 3.6 percent of its global workforce — part of a larger $5.5 billion cost-cutting drive and company restructuring.

A day later, Trian and Peltz announced that they were ending their proxy fight, saying Iger’s moves were “a win for all shareholders” and they “broadly align with our thinking.”

“We are pleased with the role that Trian was able to play in helping to focus the Board to take decisive actions which we believe will lead to better financial results,” the statement said. “We were also pleased to see the Company’s pledge to restore the dividend.”

Wall Street got its way, and 7,000 workers are out of a job.

Dean Baker, a co-founder and senior economist with the Center for Economic and Policy Research (CEPR), told Truthout that, in addition to trying to make companies more profitable for shareholders, there’s also a big element of ego involved in these Wall Street interventions.

“They want to leave their mark,” Baker said. “Hedge fund guys, and probably business executives in general. They think they know better than everyone else.”

Many acknowledge that Disney had issues it needed to address, and other major companies are also executing mass layoffs as they cut pandemic-era labor costs and work to get their stock price back up to please investors.

Meanwhile, Disney’s executives have been doing just fine. According to company filings, Iger raked in around $130 million between 2019 and 2022, while Disney’s 2022 CEO-to-worker pay ratio was 446-to-1.

Truthout reached out to Disney for comment but did not receive a response.

Disney World Workers Struggling Through Inflation

The layoffs likely won’t impact workers at Disney World in Orlando, Florida, a key part of the company’s most profitable segment, “Parks, Experiences and Products,” which raked in $28 billion in revenue last year.

But Disney World workers are busy waging another fight as they try to negotiate a new contract that can lift wages and help alleviate the severe impacts of inflation.

In early February, an astounding 96 percent of over 14,000 Disney workers voted to reject the company’s offer of a $1 increase in wages over the next year with an extra dollar added annually for four years after that.

Paul Cox is an entertainment technician at Disney World and president of International Alliance of Theatrical Stage Employees (IATSE) Local 631, which represents around 2,000 stage hands, costume workers, cosmetologists, and others who help make Disney World’s shows and characters come to life.

IATSE Local 631 is combined with five other locals as part of the Service Trades Council Union (STCU) that represents over 40,000 Disney World workers and negotiates as a single entity with the company.

“Snow White is a Teamster,” said Cox, but IATSE members sewed her costume and made her wig. “When you think about the workers at Walt Disney World, the cast that the guests interact with every single day, almost all of them are Service Trades Council worker unions.”

Cox told Truthout that Disney World workers have faced an uptick in abusive behavior from customers — including spitting, punching and kicking — which he attributes to the pandemic, saying “peoples’ patience and their ability for compassion seems to have eroded during COVID.” He says workers are demanding the right to press charges around these incidents without company interference, which he’s confident the union will win in their new contract.

But the major issue in negotiations is wages. Disney workers are asking for an immediate $3 per hour increase followed by a dollar raise in each of the following two years — so, a $5 total raise over the next three years, with a substantial raise front-loaded to address the impacts of inflation.

According to the MIT Living Wage calculator, a living wage for one adult with no children is $18.64 per hour. Cox told Truthout that nearly 40,000 of Disney World’s 45,000 workers covered by the union contract currently make less than this, and that around 25,000 make less than $16 an hour.

Disney World workers are desperate for a meaningful raise against the backdrop of rising prices and rents in Central Florida, he says. Sky-rocketing housing prices are especially hitting people hard.

“The amount of workers that I’ve tried to help keep some type of housing security over the last year has been absolutely heartbreaking,” Cox told Truthout. “Most of them work more than 40 hours a week doing everything they can not to lose everything. And right now they’re on the verge of losing everything, if they haven’t lost it already.”

Cox says the difference between a $1 and a $3 wage increase will have a substantial impact on workers’ lives.

“That’s the difference between being able to afford rent or not,” he said. “That’s the difference between having to go to a food bank to get food for the week. That’s a difference of not needing to make a choice between stretching out insulin or buying food for the week.”

In addition to wages, Cox says workers are also demanding a $6 per week cut to the amount they pay into their health care and a freeze on health care costs during the contract.

Cox said it’s important that Disney listen to its workers in Central Florida. “The majority of the company’s profit margin originates here at Disney World,” he said. “The profits from this site are keeping the rest of the Disney Company afloat. If I were the corporation, I would do nothing to jeopardize that.”

As of Thursday, February 16, things remained at a standstill after the STCU canceled planned negotiations, claiming that Disney refused to add “even one cent” to their last wage proposal.

UNITE HERE! Local 362 — part of the STCU — posted on Twitter that Disney’s new proposal “reduced retroactive pay for thousands of workers” and was “even worse than the offer already rejected.”

The union also said it is planning public actions to “bring light to the plight” of workers “struggling to survive the devastating increase in the cost of living.”

Abigail Disney Says Another Disney Is Possible

One important voice that thinks Disney can do better is that of Abigail Disney — an activist, philanthropist and award-winning filmmaker who also happens to be the granddaughter of the late Roy O. Disney, who co-founded the Disney Company with his brother Walt.

Abigail Disney has been outspoken about injustice and poverty, including among Disney workers. Her 2022 documentary, “The American Dream and Other Fairy Tales,” explores economic inequality — broadly, but also at Disney specifically.

Disney spoke to Truthout and acknowledged that the company “hasn’t had the easiest of years” and needs to address problems like overspending on streaming content and “mucking up their own creative process.”

But she says Bob Iger bears a lot of responsibility for this because of his failures to adequately plan for his succession when he stepped down as CEO in 2020. She’s not surprised he’s laying off thousands of workers, which she said is the “first go-to” of CEOs when they want to cut costs.

“They’re certainly not going to cut back on the cost of managing the company — that’s us, we’re good, we’re not the problem,” she said.

Ultimately, Disney believes there needs to be “a profound reimagining of what a company does and what it’s for.” Instead of borrowing to funnel cash toward management and shareholders — all while pressuring employees to produce more for less — she said the company should transition to a more sustainable model.

“It comes back to understanding that you can’t create profits without workers,” Disney said. “The profits and the fruits of the business rightfully belong to the people who produce it, and not exclusively to the people who own the means of production.”

She added that companies like Disney need to fundamentally rethink how they operate their businesses.

“Right now, Disney’s business plan is, we can’t make a profit unless people suffer,” she said. “Go back to the drawing board and think of another way to do it. Because not causing people to suffer isn’t optional.”

Abigail Disney said the extent of the hardships that Disney employees face was reinforced to her when she sat down with a group of workers and asked how many of them were on food stamps.

“I did not expect every hand to go up,” she told Truthout.

Then she asked how many had foregone medical care because they couldn’t afford it. Again, every hand went up.

“I am mad at myself that I didn’t take this in any sooner than I did,” said Disney.

She says Disney parks workers — which include the workers currently negotiating at Disney World in Orlando — bring in billions in profits, which is more than enough for a “material raise.”

“Disney has the capacity to do that,” she said. “The parks more than enough create the cash flow to do it with.”

However, Disney said the larger problem is the clout of the company’s Wall Street investors. While the failure to make a higher offer on wages is a company decision, it’s one made “in part because Wall Street won’t permit anyone to make a different decision.”

She called Nelson Peltz a Wall Street “fundamentalist” focused on “shifting as much value in money as possible to shareholders and no other constituency.” She said he was “just another captain” on a sinking ship and that the way he and other investors operate “has to change” for us to achieve a more sustainable economy and planet.

Disney added that Peltz “needs to recognize that if he accepts a 4 percent return over three years, instead of an 8 percent return over two years, we can do this. He can be wildly wealthy, and we do not have to be heading for the iceberg.”

Disney said she wants to see a “radical transformation” at the company. “It can be done. And Disney should lead the way.”

In the meantime, if you do visit a Disney park, she said, “please tell the people who work there that you appreciate them. And let the managers know that you don’t feel good about the way people are being treated.”

“Let the company know. We need to stop sitting back and accepting it.”

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