Disney Announces Job Cuts and Restructuring Plans to Boost Efficiency
On a call with investors, the Walt Disney Company revealed its plan to cut 7,000 jobs, approximately 3.6% of its global workforce, as part of a broader restructuring effort aiming to save $5.5 billion in costs.
Why it matters: Disney faces financial pressure from Wall Street and is striving to make its streaming business more efficient, as emphasized by CEO Bob Iger.
Details: Iger aims to make Disney more efficient while strengthening the company’s streaming services. The restructuring plan involves returning greater authority to creative leaders, holding them accountable for the financial performance of their content.
- The new structure divides the company into three parts:
- Disney Entertainment: Led by co-chairs Dana Walden and Alan Bergman, overseeing all global entertainment, media, and content businesses, including streaming.
- ESPN: Jimmy Pitaro continues as chairman, overseeing ESPN networks, ESPN+, and international sports channels.
- Disney Parks, Experiences and Products: Josh D’Amaro remains chairman, overseeing theme parks, resorts, cruises, consumer products, games, and publishing.
Financial Impact: Disney’s stock had dropped 44% in 2022, but it saw a 5% increase in after-hours trading after announcing the changes and the fourth-quarter earnings report.
- Reductions in non-content costs will reach approximately $2.5 billion, with $1 billion in savings already underway.
- The company expects to deliver around $3 billion in savings over the next few years, excluding sports.
Streaming Challenges: Disney reported its first-ever subscriber loss for Disney+, partly attributed to a price hike. Despite this, losses were smaller than expected. Iger dismissed rumors of spinning off ESPN.
Future Focus: Disney, like Netflix, will no longer provide long-term subscriber growth guidance. The focus is on “enduring growth and profitability” in the streaming business. Disney+ is expected to be profitable by the end of fiscal year 2024.
