Disney Company Fires Hundreds of Employees to Save Face with U.S. Government

Disney suddenly fired hundreds of employees working in the company’s Beijing, China, office earlier this year, and now investors know why.

Related:Disney Can’t Afford for Fans, Investors to Know About Its Ties to Communist China

In March 2023, hundreds of Disney employees working in China were given the boot, but because the move came several weeks after The Walt Disney Company’s fiscal first-quarter earnings call, during which CEO Bob Iger divulged his plans for a massive $5.5 billion cost-cutting initiative, the layoffs didn’t raise many eyebrows.

Is Trimming Expenses to Blame?

According to The Wall Street Journal, Disney laid off more than 300 employees in the capital city of Beijing. The employees affected were involved in Disney’s streaming service. At the time, the layoffs were perceived as part of Disney’s forecasted $5.5 billion cost-cutting initiative and seen as more of CEO Bob Iger’s plan to cut costs by slashing more than 7,000 jobs within The Walt Disney Company.

Credit: Disney/Canva

During the earnings call, the need for such drastic changes within the company was so dire that the veteran CEO promised they would go into effect immediately. Disney’s President of Parks, Experiences, and Products, Josh D’Amaro, said the changes would be felt across the entire company, including at Disney’s U.S. theme park resorts.

Layoffs for a Different Reason Entirely

Now, however, The Wall Street Journal reports that Disney dismissed hundreds of employees in its Beijing office as a way of saving face during an upcoming meeting with U.S. Congressman Mike Gallagher (R-Wisconsin), who chairs a committee focused on the United States’ competition with China. The committee is also very interested in data privacy as it relates to that relationship.

Related: Communist China Owns Disney’s Theme Parks, and Fans Were None the Wiser

Per The New York Post, Gallagher has been a “tenacious critic” as it pertains to data security and China’s potential access to American consumer data. The group of Disney employees that were excused had access to some of that data, according to those close to the situation, and Disney’s attorneys had reportedly been vocal about concerns about that access, saying it “could be seen as a potential red flag by the committee.”

Rep. Mike Gallagher (L) and Disney CEO Bob Iger/Credit: NY Post/ABC/Canva

Disney, however, denies that the layoffs were related to the meeting planned between CEO Bob Iger and Rep. Gallagher and maintains that the changes were part of Disney’s cost-cutting initiative, first outlined in the February earnings call.

According to a representative for The Walt Disney Company, “Disney’s decision to restructure and consolidate these operations was not motivated by data security vulnerability concerns.”