Disney to hire majority of Character.AI staff after bankruptcy

Disney has agreed to offer jobs to at least 60 of Character.AI’s employees — the majority of the startup’s workforce — paying an estimated $60 million in combined annual compensation, according to a legal filing spotted by Bloomberg. The filing says the “vast majority” of employees who received offers have already accepted them. Because the deal is structured as a stalking horse bid, a rival bidder could still top Disney’s offer.

The hiring plan follows Character.AI’s bankruptcy filing earlier this week. Disney had previously agreed to acquire some of the startup’s assets for $20 million. Karandeep Anand, Character.AI’s former chief executive, recently took over as Disney’s first chief technology officer.

The filing attributes Character.AI’s troubles to high costs and potential legal and regulatory exposure, despite a sizable, engaged user base. A separate lawsuit, filed by a mother who said her 14-year-old son grew obsessed with one of Character.AI’s chatbots and later died by suicide, is pending against the company, which also faces government child-safety investigations.

Why it matters

The deal could let Disney absorb AI talent and technology from a distressed rival at a fraction of its earlier value, while Character.AI’s safety and legal liabilities remain with the bankrupt entity rather than following its staff.