Disney to Spend $60 Million a Year on Character.AI Talent After Its Own Layoffs as AI Startup Faces Bankruptcy

Walt Disney Co. (NYSE:DIS) plans to pay $60 million a year for 66 Character.AI employees, shortly after reducing its own workforce.

The compensation plan appears in a Chapter 11 filing by Character.AI’s parent company.

Disney Bets on AI Under CEO Josh D’Amaro

The disclosure follows the hiring of Character.AI CEO Karandeep Anand by Disney in mid-September as its first company-wide tech chief. Disney has not said how much it pays Anand.

The hires are part of Disney CEO Josh D’Amaro’s AI strategy.

The move came two weeks after Disney laid off several hundred workers, including some tech staff. It was the third major layoff round since D’Amaro took over in mid-March.

Retention Pool, Asset Bid Add to Cost

Disney is also setting aside $30 million for an "aggregate retention pool." The filing says it expects to spend $180 million on compensation and retention over three years.

Of the 66 staffers offered jobs, 56 have resigned from Character.AI. The other 10 await U.S. work visa updates, Business Insider reported.

Disney also agreed to pay $20 million for key assets, including some IP and technology. Disney is the stalking-horse bidder, meaning it sets a minimum price while rivals can bid higher. Competing bids are due Nov. 20. The sale could close in late November or early December, subject to court approval.

Disney’s stock closed 0.08% lower at $110.59 on Friday. Year-to-date, Disney’s stock has declined 2.80%.

Legal Pressures Behind the Filing

Character.AI faced lawsuits from families who alleged their teenagers harmed themselves or died by suicide after using its chatbots, the report added. The startup and backer Google, part of Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), settled several child safety cases earlier this year.

Google struck a $2.7 billion deal in October 2024 that brought Character.AI’s founders, some staff and a license to the startup’s models to the tech giant.

Disney sent a cease-and-desist letter last fall over unauthorized use of its copyrighted characters. Character.AI complied and removed chatbots featuring Disney franchises such as Star Wars and Marvel.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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