The Walt Disney Co. announced plans Wednesday to cut about 4% of its entire workforce. That means layoffs for 7,000 employees.
The company’s stock increased immediately after the announcement, which was expected.
Returning CEO, Bob Iger, is making a statement to his board about the company’s finances moving forward.
The layoffs are part of Disney’s efforts to achieve about $5.5 billion in cost savings. Of that, $2.5 billion represents “non-content costs” (including labor costs) and $1 billion of those targeted cost-reductions are already underway, Iger said.
Disney is aiming for an annualized reduction of $3 billion in non-sports content costs, expected to be realized over the next several years, Disney CFO Christine McCarthy told analysts.
Of the $2.5 billion in non-content expenses, about 50% represents marketing spending; 30% represents labor costs; and 20% represents technology, procurement and other expenses, McCarthy said. Disney expects those cost savings to “fully materialize” by the end of fiscal 2024.
Iger said he did not take the decision to cut jobs lightly. “I have enormous respect and appreciation for the dedication of our employees worldwide,” he said.
On the content front, Iger said, “We are going to a really hard look at everything we make [in general entertainment] because things in a more competitive world have simply gotten more expensive.”
The announced job cuts came as Iger also announced a new operating structure for Disney, organized in three core business segments: Disney Entertainment, headed by co-chairs Dana Walden and Alan Bergman; ESPN, led by Jimmy Pitaro; Disney Parks, Experiences and Products, led by Josh D’Amaro. The reorganization dismantles the Disney Media and Entertainment Distribution (DMED) group established by former CEO Bob Chapek in 2020.
For the December 2022 quarter, Disney beat Wall Street estimates on the top and bottom lines. In the period, Disney+ registered its first-ever decline in subscribers — shedding 2.4 million — driven by losses at Disney+ Hotstar, the version of the service available in India and parts of Southeast Asia.
Disney has actually been doing relatively well of late, with profits and revenues up, strong figures from theme parks, and more subscribers on Disney-owned streaming services such as ESPN+ and Hulu — although not Disney+. That platform lost 2.4 million subscribers in the first quarter of the fiscal year, according to the company’s latest earnings report.
But profits from traditional television have dropped, and none of the streaming services are making money.
