Despite the understandable popularity of streaming services, entertainment companies too are feeling the economic squeeze of the SARS-CoV-2 coronavirus pandemic. Because of this, a giant in that sector, Walt Disney (NYSE: DIS), announced Thursday that it will start furloughing many of its employees beginning Sunday, April 19.
Previously, it had pledged to pay all employees in full and continue providing benefits until April 18. It will also pay their healthcare premiums during that period.
"However, with no clear indication of when we can restart our businesses, we're forced to make the difficult decision to take the next step and furlough employees whose jobs aren't necessary at this time," the company wrote in a statement. It did not give any indication of how many workers would be affected, nor did it elaborate on what constitutes a "necessary" job.
Meanwhile, some of the company's top employees are taking temporary pay cuts. It was announced several days ago that Disney's highest-level managers would have their salaries reduced. This lineup includes recently installed CEO Bob Chapek, who's taking a 50% reduction, and ex-CEO and current executive chairman Bob Iger, who will entirely forgo his base salary.
Disney's latest move does not come as a surprise. Last month the company acted quickly to shut down operations in its theme parks -- including the iconic Disneyland -- its various TV and film productions, and sailings of its cruise ships, among other businesses.
On Thursday, Disney shares nosed up by over 2%, slightly lagging behind the gains of other top stocks and the main equity trading indexes.
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Eric Volkman owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short April 2020 $135 calls on Walt Disney. The Motley Fool has a disclosure policy.
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