Disney to lay off 7,000 workers, cut $5.5 billion worth of costs in latest reshuffle
Disney (DIS) is laying off 7,000 employees as the company seeks to cut costs by $5.5 billion. As a result, the media giant plans to restructure the organization into three core business segments: Disney Entertainment, ESPN and Disney Parks, Experiences and Products.
“We will be reducing our workforce by approximately 7,000 positions,” said CEO Bob Iger during the first-quarter results announcement. “While this is necessary to address the challenges we face today, I do not take this decision lightly. I have tremendous respect and appreciation for the talent and dedication of our people around the world, and I am aware of the personal impact of changes.”
Disney shares soared as much as 8% after Iger commented on job cuts and cost cutting. Since then, shares have declined slightly in after-hours trading and are up about 5%.
Disney reported quarterly results after Wednesday’s bell that showed a bounce in both the upside and downside as demand for the company’s theme parks surged during the holiday season.
As expected, Disney+ subscribers fell slightly in the first quarter due to the absence of the Indian Premier League cricket tournament at its Indian brand Disney+ Hotstar.
Streaming losses narrowed to $1.1 billion in the first quarter from a $1.5 billion loss in the fourth quarter — ahead of the company’s previous guidance as Disney’s ad-supported tier and recent price hikes helped to reduce the losses.
Wednesday’s report was the first since CEO Bob Iger returned to the company in November
In his prepared remarks, Iger said the new strategic organization will “result in a more cost-effective, coordinated and streamlined approach to our operations, and we strive to run our businesses more efficiently, particularly in a challenging economic environment.”
Alan Bergman and Dana Walden will become co-chairs of Disney Entertainment, which will encompass the company’s entire portfolio of entertainment media and content businesses worldwide, including streaming.
Jimmy Pitaro will continue as chairman of ESPN, which includes ESPN Networks, ESPN+ and its international sports channels, while Josh D’Amaro will continue as chairman of Disney Parks, Experiences and Products.
Iger underscored his commitment to creating a direct link between content decisions and financial performance. He said Disney+ is on track to be profitable by the end of fiscal 2024.
Elsewhere on the conference call, Iger revealed that he has asked the board to reintroduce the company’s dividend by the end of the calendar year — something activist investor Nelson Peltz specifically urged in his proxy fight.
The dividend, which was halted during the pandemic to save cash, will be “modest” at first but will steadily increase over time, the executive said, adding, “Our cost-cutting initiatives will make this possible.”
Peltz’s Trian Fund Management said it owns about 9.4 million shares of Disney stock, equivalent to about $900 million. The hedge fund, which disapproved of Iger’s surprise return, is pushing for additional cost cutting, operational adjustments and a post-Iger successor — something the company also wants.
“On the issue of succession, the board recently established a dedicated succession planning committee, chaired by Mark Parker, who will become chairman of the board of The Walt Disney Company after the annual meeting in early April,” Iger said on the conference call.
The executive didn’t directly address the current proxy fight with Peltz. The Company will host its annual stockholders meeting on Monday, April 3 at 10:00 am PT.
Alexandra is a senior entertainment and media reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]
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