Disney is increasing its investment in the employees of a AI chatbot startup that has filed for bankruptcy, just when this media giant recently reduced its own technical team.
According to the Chapter document submitted by its parent company on Tuesday, Disney plans to pay $60 million per year to 66 employees from Character.AI. In mid-September, Disney hired Character.AI's CEO, Karandeep Anand, to serve as the company's first corporate-wide technical leader. (The company has not yet disclosed the salary paid to Anand.)
These new additions are part of the strategy driven by Disney CEO Josh D and Amaro to advance the AI initiative. DAmaro has been investing in this media giant's technology platform to help boost its stagnant stock price. Over the past 12 months, Disney's stock price has risen by less than 2%, while it has fallen by more than 36% over the past five years.
Disney's decision to hire these Character.AI employees came after it laid off hundreds of people in late September, including some technical staff. Since D' Amaro took over in mid-March, the layoffs in late September were Disney's third major round of downsizings.
In addition to a salary of $60 million, Disney will also set aside an additional $30 million as a "retention pool" to motivate employees of Character.AI. The document states that the company expects to spend $180 million over the next three years on these employees for "total compensation and retention."
After Disney sent out job offers to 66 Character.AI employees, 56 of them have already resigned from this AI startup company, while the remaining 10 are waiting for the U.S. government to update their work visas.
Entertainment lawyer, Corey Martin of Granderson Des Rochers, provides consulting services for companies involved in media transactions. He stated that he is not surprised by these salary figures, as the employees of Character.AI are their greatest asset.
Martin said, "They are employees with very high salaries. The numbers may seem astonishing, but they are not particularly rare in this field." Martin was not involved in this transaction and does not work for Disney either.
Disney has also agreed to pay $20 million for the key assets of Character.AI, which include some intellectual property and technology. Other companies can submit competitive bids for these assets before November 20th. The entire process will be supervised by a bankruptcy court judge. Disney has not responded to requests for comments on this matter.
Character.AI applied for bankruptcy after facing multiple lawsuits. Relevant families alleged that teenagers self-harmed or committed suicide after using the company's customized AI chatbot. The AI startup and one of its investors, Google, reached a settlement regarding several child safety lawsuits earlier this year.
Last autumn, Disney sent a cease-and-desist letter to Character.AI, demanding that they not create AI chatbots featuring Disney copyrighted characters without permission. Character.AI subsequently complied and removed the chatbots that featured characters from Disney properties such as "Star Wars" and Marvel.
In the bankruptcy announcement, Character.AI stated that the company has been facing “significant legal, regulatory, and operational headwinds.”
Anand stated in a memo sent to Disney employees last Friday that the media giant is “in a unique position to succeed in a highly competitive media business that he believes is at a turning point.” This technical leader also expressed his joy at meeting the new colleagues and looked forward to working with them.
He said, "What is most notable is the talent and dedication this team puts into their work, the craftsmanship that Disney has already honed, and the solid foundation you have established."
