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Disney plans to idle 4,000; its shares fall

NEW YORK — Shares of The Walt Disney Co. fell 5 percent Wednesday after the company said it plans to eliminate 4,000 full-time jobs, or about 3 percent of its work force, citing "increasingly pressing challenges of the softening economic environment."

The media and entertainment giant said late Tuesday it will try to achieve the cuts through a voluntary program within the next month but that layoffs will occur if the full reduction is not achieved.

The cuts will come across all operating areas, including the company's corporate staff in Burbank, Calif., and would be accomplished by July, the company said.

The company employs 120,000 workers worldwide, with the greatest concentration — 55,000 — in Orlando, Fla.

In trading Wednesday on the New York Stock Exchange, shares of Disney were off $1.33 to $27.87.

Disney spokesman John Dreyer said the cuts would result in $350 million to $400 million in annual savings. The company will take a one-time charge of less than $250 million, he said.

In a letter addressed to "fellow cast members," Disney chairman Michael Eisner and president Robert Iger said the company has been working to contain costs and operate more efficiently.

"But despite our progress, the economy has become more challenging in recent months and we must continue to seek ways to manage our businesses even more productively," the letter said.

Disney said it would offer special severance incentives, including extended benefits and outplacement services. The company would not provide details of the offer Tuesday.

Since January, the company has laid off 535 workers from its Walt Disney Internet Group. The company also said at that time it would eliminate its tracking stock for the Internet division after failing to make inroads into the portal marketplace, dominated by Yahoo! and America Online.

In a separate move, Walt Disney World, central Florida's largest employer, ordered a hiring freeze. Only critical positions will be filled there.

The company's ABC Television network has struggled recently with a softening advertising market due to a general weakness in the economy. And analysts have been concerned that declining consumer confidence would hurt attendance at the company's theme parks.

"The news has been anticipated," Christopher Dixon, an analyst at UBS Warburg, said Tuesday. "There has been major concerns in the advertising market and Disney has been expanding. Disney has had an ongoing focus on cost cutting and is clearly using the current weakness in the marketing environment to trim some excess fat."