Disney is putting 7,000 jobs on the chopping block.
The layoffs are part of the entertainment giant’s plan to trim costs as part of a large-scale restructuring announced by comeback CEO Bob Iger. “This reorganization will result in a more cost-effective, coordinated approach to our operations,” Iger told analysts on a conference call. “We are committed to running efficiently, especially in a challenging environment.”
In his first earnings report during his second stint as chief, Iger also announced the company will restructure into three segments:
🎥 an entertainment unit that encompasses film, television and streaming, which TV executive Dana Walden and film chief Alan Bergman will spearhead;
🎾 a sports-focused ESPN unit, which will continue to be led by Jimmy Pitaro;
🎢 and Disney parks, experiences and products, with Josh D’Amaro at the helm.
While Disney’s fourth quarter earnings overall beat Wall Street’s expectations, its streaming service Disney+ lost users for the first time since its launch in November 2019. Its slowing subscriber growth, combined with stiffening competition, prompted Iger’s tight-fisted approach.
3.6%: Share of the global workforce Disney is laying off. Iger didn’t disclose which departments are affected to what extent
$5.5 billion: Estimated cost-saving from the layoffs
4.7%: How much Disney’s shares soared in after-hours trading
Most entertainment companies are reducing costs by trimming their headcount.
Warner Bros. Discovery spent most of last year downsizing, starting with 70 HBO Max employees, mainly in casting, acquisitions and reality TV divisions, in August. In October, the company laid off 82 people from its TV group, and decided to leave 40 open vacancies unfilled. The next month, it cut around 70 staffers from its sports division.
Separately, Netflix also went on a slasher spree, cutting 150 jobs in May 2022 and another 300 the following month.
What’s more is that these moves are not made in isolation. As Netflix reduced the size of its workforce, it launched its ad-supported tier. Starting this month, Warner Bros hiked the monthly fee from HBO Max from $14.99 to $15.99. Similarly, Disney+’s layoffs come at the heels of it raising the price of its ad-free service from $7.99 per month to $10.99.
In the last few months, Nelson Peltz, the head of investment firm Trian Group, has been—much to Disney’s chagrin—vying for a seat on the Mouse House’s board
Among other things like lack of succession planning, Peltz has repeatedly pointed to the unsustainability of the streaming business. He claims the streaming arm is propped up by earnings from the ever-successful parks segment, which, once again, was the brightest spot in the earnings.
Clearly, Disney’s making moves to rectify exactly this. However, it’s not interested in Peltz’s hand-holding. In a Feb. 6 proxy filing, it urged shareholders not to vote for Trian Group representatives, and change their mind if they already had.
After delivering the somewhat somber news around subscriptions and layoffs, Disney teased some more exciting offerings: sequels in the massively popular Toy Story and Frozen franchises. For those losing their jobs, however, this is no happy ending.