Nightmare start for new Disney CEO as Sora shutdown makes it a trifecta of losses

This can’t be how Josh D’Amaro wanted to start his new job. 

Following the abrupt cancellation of “The Bachelorette” over Taylor Frankie Paul’s domestic violence issues, D’Amaro — who only started as CEO last week — has yet another debacle on his hands after it was announced on Tuesday that OpenAI was shutting down its Sora video app. 

The announcement which sent shockwaves through the media and tech worlds  scuttled the $1 billion deal that Disney entered into with OpenAI that created a huge amount of bad blood between Disney and the town’s creative community.

OpenAI CEO Sam Altman testifying before the Senate Committee on Commerce, Science, and Transportation. Getty Images

When OpenAI first released Sora last year to the public, users immediately began creating videos that included all sorts of well-known, and Hollywood-owned, IP. That touched off a legal firestorm that ended with OpenAI backtracking and putting guardrails in place to try to prevent IP infringement. So when Disney announced it would be licensing hundreds of its most valuable characters to Sora, much of the industry was aghast. The Writers Guild said the deal appeared to “sanction [OpenAI’s] theft of our work.”

Three months later, Disney now has another problem on its hands — an optics one. Sources tell Page Six Hollywood that with Sora shutting down, the content deal with Disney is dead as is the company’s $1 billion equity investment in Sora. Perhaps even more shocking, P6H hears, is that Disney only found out about OpenAI’s decision very recently. (One source added that Disney and OpenAI didn’t get very far on the licensing part, and no money ever changed hands.)

When it was first announced, the deal was considered precedent-setting as it was the first major partnership between OpenAI and Hollywood. Just last month, Disney was teasing that user-generated videos from Sora were coming to Disney+, and that in spring the OpenAI partnership would really start to make an impact. (Interestingly, D’Amaro didn’t bring up OpenAI during last week’s shareholder meeting even when he answered a question on how Disney views the use of AI.) 

The question is how could Disney — not known as a fly by the seat of its pants company — get caught so off guard? Before he became CEO, D’Amaro was instrumental in helping his predecessor Bob Iger land some of Disney’s biggest tech-focused deals. D’Amaro was part of Disney’s $1.5 billion investment into Epic Games, which many believe helped win him the CEO job. When D’Amaro was tapped to succeed Iger, Disney board chairman James Gorman made it a point to namecheck the exec as being involved in the OpenAI deal.

Josh D’Amaro speaks at the grand opening of the Zootopia-themed land at Shanghai Disney Resort. VCG via Getty Images

Making the timing in this even more curious: On Monday, OpenAI published a blog post on best practices to use Sora safely.

P6H also reported last week, that OpenAI CEO Sam Altman was in town holding court at Tower Bar during Oscars weekend as Disney execs Dana Walden and Debra OConnell dined across the room. 

Adding to D’Amaro’s woes, the Sora news came hours after Epic laid off over 1,000 employees due to a “downturn in Fortnite engagement.”