CEO Iger plans to fire off 7,000 staff as part of a significant restructuring at Disney.
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ANGELES, CA: In an effort to cut costs by $5.5 billion and make its streaming business profitable, Walt Disney Co. on Wednesday announced a comprehensive restructuring under newly appointed CEO Bob Iger, which included the elimination of 7,000 jobs.
An estimated 3.6% of Disney's global workforce will be affected by the layoffs.
After-hours trading saw a 8% increase in Disney shares to $120.77.
Iger stated that he would divide the business into three segments: a unit of entertainment that includes streaming, television, and movies; an ESPN unit devoted to sports; and Disney attractions, experiences, and merchandise.
On a conference call, Iger stated to analysts, "This reorganization will result in a more cost-effective and coordinated approach to our operations." We are determined to operate effectively, particularly in a challenging setting."
Iger also said that by the end of 2023, he would ask the board of the company to reinstate the dividend for shareholders.
The CEO, who retired in November and returned to run Disney for two more years, is under pressure to boost financial returns. Nelson Peltz, an activist investor, is vying for a seat on Disney's board, arguing that the company has overspent on streaming and failed to plan for succession.
Disney is the most recent media company to announce job cuts as a result of increased competition for streaming viewers and a slower growth in subscribers. Disney's Disney+ streaming media unit suffered a loss of more than $1 billion in the first quarter, as previously reported.
Both Netflix and Warner Bros. Discovery have previously experienced layoffs.
It was Disney's third restructuring in five years when it announced in November 2020 that it would lay off 32,000 employees, primarily from its theme parks, at the height of the pandemic. In the first half of fiscal 2021, the reductions were implemented.
Disney stated that it planned to reduce other operating costs and sales and general administrative expenses by $2.5 billion. This effort is already under way. Layoffs, as well as reductions in non-sports content, would result in savings of another $3 billion.
According to data from Refinitiv, Disney's adjusted earnings per share for the quarter that ended on December 31 were 99 cents, exceeding the average analyst estimate of 78 cents.
Analysts had expected net income of $1.429 billion, but it was only $1.279 billion. In excess of Wall Street estimates of $23.4 billion, revenue reached $23.512 billion.
Iger's first term as CEO began in 2005, and the reorganization marks a new era in his leadership. He then bought Pixar Animation Studios, Marvel Entertainment, and Lucasfilm to add to Disney's arsenal of powerful entertainment brands. Iger repositioned the company a decade later to take advantage of the streaming revolution by acquiring the film and television assets of 21st Century Fox in 2019 and launching the Disney+ streaming service that year.
In 2020, Iger resigned from his position as CEO, but he resumed it in November 2022.
Iger will now try to get Disney's streaming business to grow and become profitable. In addition, the new structure fulfills Iger's promise to return decision-making to the creative leaders of the company. These leaders will decide which movies and series to make and how to distribute and market the content.
Disney has undergone three reorganizations in the past five years. In order to accelerate the expansion of its streaming business, it reorganized its operations in 2018 and again in 2020.
ANGELES, CA: In an effort to cut costs by $5.5 billion and make its streaming business profitable, Walt Disney Co. on Wednesday announced a comprehensive restructuring under newly appointed CEO Bob Iger, which included the elimination of 7,000 jobs.
An estimated 3.6% of Disney’s global workforce will be affected by the layoffs.
After-hours trading saw a 8% increase in Disney shares to $120.77.
Iger stated that he would divide the business into three segments: a unit of entertainment that includes streaming, television, and movies; an ESPN unit devoted to sports; and Disney attractions, experiences, and merchandise.
On a conference call, Iger stated to analysts, “This reorganization will result in a more cost-effective and coordinated approach to our operations.” We are determined to operate effectively, particularly in a challenging setting.”
Iger also said that by the end of 2023, he would ask the board of the company to reinstate the dividend for shareholders.
The CEO, who retired in November and returned to run Disney for two more years, is under pressure to boost financial returns. Nelson Peltz, an activist investor, is vying for a seat on Disney’s board, arguing that the company has overspent on streaming and failed to plan for succession.
Disney is the most recent media company to announce job cuts as a result of increased competition for streaming viewers and a slower growth in subscribers. Disney’s Disney+ streaming media unit suffered a loss of more than $1 billion in the first quarter, as previously reported.
Both Netflix and Warner Bros. Discovery have previously experienced layoffs.
It was Disney’s third restructuring in five years when it announced in November 2020 that it would lay off 32,000 employees, primarily from its theme parks, at the height of the pandemic. In the first half of fiscal 2021, the reductions were implemented.
Disney stated that it planned to reduce other operating costs and sales and general administrative expenses by $2.5 billion. This effort is already under way. Layoffs, as well as reductions in non-sports content, would result in savings of another $3 billion.
According to data from Refinitiv, Disney’s adjusted earnings per share for the quarter that ended on December 31 were 99 cents, exceeding the average analyst estimate of 78 cents.
Analysts had expected net income of $1.429 billion, but it was only $1.279 billion. In excess of Wall Street estimates of $23.4 billion, revenue reached $23.512 billion.
Iger’s first term as CEO began in 2005, and the reorganization marks a new era in his leadership. He then bought Pixar Animation Studios, Marvel Entertainment, and Lucasfilm to add to Disney’s arsenal of powerful entertainment brands. Iger repositioned the company a decade later to take advantage of the streaming revolution by acquiring the film and television assets of 21st Century Fox in 2019 and launching the Disney+ streaming service that year.
In 2020, Iger resigned from his position as CEO, but he resumed it in November 2022.
Iger will now try to get Disney’s streaming business to grow and become profitable. In addition, the new structure fulfills Iger’s promise to return decision-making to the creative leaders of the company. These leaders will decide which movies and series to make and how to distribute and market the content.
Disney has undergone three reorganizations in the past five years. In order to accelerate the expansion of its streaming business, it reorganized its operations in 2018 and again in 2020.
