Disney Stops Paying Nearly 100,000 Workers Amid Shutdown

BURBANK, CA — Walt Disney Co., the world's largest entertainment company and one of Southern California's biggest employers, will stop paying more than 100,000 employees this week. The controversial move makes nearly half its workforce eligible for unemployment while still protecting executive bonuses, it was reported Monday.

Disney aims to save up to $500 million a month across its theme parks and hotels, which have been shut in Europe and the U.S. for almost five weeks, the Financial Times reported. However, in going a step further than other theme parks and shifting potentially hundreds of millions in payroll burden to the state, Disney is risking reputation of the century-old empire behind Mickey Mouse, the Times reported. Neither NBCUniversal and Warner Media have yet announced such severe measures. At the same time, Disney is reportedly protecting its executive-bonus schemes and a $1.5 billion dividend payment due in July.

The move may signal Disney's plans for a prolonged shutdown.

Disney over the past month has raised debt and signed new credit facilities, leaving the company with about $20 billion in fresh cash to draw upon for a downturn. "They could afford" not to furlough staff, said Rich Greenfield, analyst at BTIG, The Times reported.

He cautions, however, that Disney is probably braced for a "very prolonged shutdown." Disney made nearly $7 billion in operating income from its parks, experiences and products business last year, making up nearly half of all operating profits. Shares in Disney have fallen by a quarter since the outbreak of the virus.

By contrast, some big multinationals, including L'Oreal and Total in France, have vowed to forgo state aid in a show of solidarity with taxpayers.

City News Service and Patch Staffer Paige Austin contributed to this report.