Disney Is Paying $60 Million a Year for a Bankrupt Chatbot Startup's Staff

When a startup goes bankrupt, the usual story is that the staff update their LinkedIn profiles and hope. Character.AI’s staff seem to have done rather better. Most of them are going to Disney, and Disney is paying handsomely for the privilege.

According to a Chapter 11 filing first spotted by Bloomberg and reported by TechCrunch, Disney has agreed to make job offers to the majority of the chatbot company’s workforce. Business Insider puts the number at 66 people, with Disney planning to pay them about $60 million a year in total compensation.

The numbers in the filing

The headline figure is only part of it. Business Insider reports that Disney is also setting aside a $30 million “aggregate retention pool” to keep the new arrivals from wandering off. In total, the filing says Disney expects to spend $180 million on compensation and retention for these staff over the next three years.

By our own rough arithmetic, $60 million spread across 66 people works out to an average of about $900,000 a year each, before the retention money. That is an average, not anyone’s actual salary, but it gives a sense of how the market prices people who have built consumer AI products at scale.

The offers appear to be landing. TechCrunch says the filing describes the “vast majority” of those offered jobs as having accepted, and Business Insider reports that 56 of the 66 have already resigned from Character.AI.

Separately, Disney has already agreed to buy some of Character.AI’s assets for $20 million, according to TechCrunch. The startup’s former chief executive, Karandeep Anand, joined Disney in September as its first company-wide chief technology officer.

The awkward timing

Here is the part that will sting inside Disney. Business Insider reports that the Character.AI hiring came about two weeks after Disney laid off several hundred workers, including some tech employees. Those late-September cuts were the company’s third major round of layoffs since Josh D’Amaro took over as chief executive in mid-March.

Companies cut in one place and spend in another all the time. Still, it is a clear signal of where Disney thinks value sits. A few hundred existing roles were judged expendable, while a ready-made team that knows how to build chatbots people actually talk to was judged worth nine figures over three years.

Why Character.AI ended up here

The startup did not fail for lack of users. TechCrunch says the filing describes a “large and engaged user base,” but also high costs and “potential litigation-related liabilities and regulatory engagement.” The company faces lawsuits and government investigations over child safety, which makes it a much less attractive thing to buy outright than to hire from.

That is the pattern worth watching. Big companies increasingly want the people, the know-how and a few selected assets, without taking on the legal baggage of the company itself.

It is not final yet

TechCrunch notes that Disney’s offer is a stalking horse bid, meaning it sets a floor in the bankruptcy process. Another company could still come forward with a higher offer. Given what Disney is willing to pay, anyone hoping to outbid it will need deep pockets and a strong stomach for the lawsuits that come with the brand.

For now, the clearest lesson is about the labour market. In AI, a bankruptcy can still turn into one of the better-paid group job moves of the year.