Disney cuts staff while directing $9 billion to shareholders

The chief legal officer of The Walt Disney Company, Horacio Gutierrez, sent his staff a memo warning that the legal and global affairs department will become "a much smaller organization than it is today," and that "some of you will be personally affected." The letter went out on September 18 and was reported by Deadline. In parallel, the company is preparing a separate, broader round of layoffs — according to the same outlet, it could begin as early as next week.

How many jobs will disappear in each case and when the decisions on the legal division take effect, Disney is not disclosing; the company has made no public comments on the memo. It is also unclear whether the new cuts will affect the animation units.

The company earns more and trims staff more often

The cuts are happening amid growing financial results. In the third fiscal quarter, ended June 27, Disney's revenue was $25.2 billion — 7% more than a year earlier. Total segment operating income grew 21% to $5.6 billion, while the entertainment segment added 64% and brought in $1.68 billion. Quarterly profit: $2.64 billion.

Over the first nine months of the fiscal year the company spent $7.2 billion on buying back its own shares and $1.3 billion on dividends, and invested another $6.8 billion in parks, resorts and other property. In August Disney raised its buyback plan to "at least $9 billion" for the full fiscal year. A buyback reduces the number of shares in circulation and can lift the value of those remaining with investors; neither the buyback nor the dividends go to employees, most of whom are not shareholders.

Legal work will go to algorithms and contractors

Gutierrez listed for staff how the department will be shrinking: automating part of its processes "using the latest technologies," moving to self-service models, bringing in alternative legal service providers, expanding shared services and outsourcing. He called what lies ahead a "difficult choice." The legal and global affairs department numbers fewer than a thousand people worldwide.

On the same day, September 18, Disney announced the first company-wide chief technology officer position in its history. It was taken by Karandeep Anand, who previously headed the AI service Character.AI and earlier worked at Brex, Meta and Microsoft. He starts on October 2, reports directly to the chief executive and is responsible for corporate infrastructure, data and AI platforms, product and engineering. Part of Character.AI's technical team is expected to move to the company with him.

The third wave in half a year

Josh D'Amaro took over Disney in March 2026, succeeding Bob Iger. In April the company laid off about a thousand people. In July several hundred more cuts were announced, and Pixar was noticeably hit. The autumn round will be the third in half a year. Gutierrez's letter went out against the backdrop of an expiring deadline for a voluntary early retirement program for some executives, which the company announced in August; involuntary cuts were expected to follow it from the start.

Why this is happening

Disney switched on austerity mode back under Iger, when the company announced programs to cut costs and jobs. The difference in the current cycle is in the explanation. Earlier the talk was of an oversupply of content and losses in the streaming division, now it is about efficiency and technologies that make it possible to do the same work with fewer people. Gutierrez himself frames this as an "unbiased look" at every aspect of the department's work for the sake of a leaner model.

The company's turnaround on generative AI is also telling. Disney previously defended its characters against AI services in public by legal means, and then announced a partnership with OpenAI; now the former head of Character.AI has become Disney's chief technology officer. Judging by this trajectory, the company has probably stopped viewing generative models solely as a legal threat and has begun embedding them into its own processes — starting with functions where the result is easy to measure in money.

For artists this is an alarming signal precisely because the legal department looks like a convenient testing ground. If automating routine work there delivers the stated savings, the argument will probably be extended to other divisions as well — although Disney is not yet saying whether this will touch animation.

As long as the company has named neither figures nor deadlines, it is too early to judge the scale. But the choice of priorities has already been made publicly: the company raised its share buyback plan, while on the number of jobs it offers no comment.

Community reaction

On the day Disney's chief legal officer warned of "difficult decisions" and a more compact company, the discussion on X turned out split and cynical, without a common wave of support or outrage. Under Deadline's item, some people are ready to accept the cuts if bloated executive salaries are trimmed and the money goes into parks and films. Others immediately doubt it: it will not be the top that suffers but the parks and rank-and-file employees, while the author of the warning is in no danger of losing his own post. Separately, there is fatigue — who else is there left to lay off after the string of cuts this year — and a guess that behind the wording lies further shrinking of the apparatus, including by means of artificial intelligence.

A direct juxtaposition of the new cuts with the billions for share buybacks has so far barely spread. The industry outlet Cartoon Brew itself placed quarterly profit and the share buyback next to the threat of a new wave of layoffs; in the replies, an artist who previously worked at Disney and Pixar confined himself to a short "brutal." There is no separate storm around the nine billion for shareholders on this occasion.

"Who else is there even to lay off?!"

— @MysteryAdExec (X)

"If a more compact organization means fewer bloated salaries, and that money then goes to better budgets for parks and films, I'm for it."

— @jas_cant_hang (X)

"Trimming this company's corporate top is an excellent idea, but unfortunately the cuts will most likely hit the parks harder."

— @Darthdisney1977 (X)

What lies behind the cuts at Disney: a bet on AI and outsourcing, the failure of management strategy, the general downturn in the animation industry?