Disney to lay off 7,000 people in effort to save $5.5 billion in costs

Disney to lay off 7,000 people in effort to save $5.5 billion in costs

Photo of the Disney store front in front of pedestrians

The Disney Store media brand in London, UK on September 7, 2022. Photo: Mike Kemp/In Pictures via Getty Images

Walt Disney Company announced on a call with investors on Wednesday that it plans to cut 7,000 jobs this year – or about 3.6% of its global workforce – as part of a broader restructuring plan and of a greater effort to save $5.5 billion in costs.

The big picture: Faced with financial pressure from Wall Street, CEO Bob Iger reiterated its plan to make Disney more efficient while bolstering the company’s streaming business.

  • Iger had sworn to reorganize the company when he was renamed CEO at the end of last year, canceling most of the organization changes made under former CEO Bob Chapek

Details: Disney will aim to return greater authority to the company’s creative leaders and make them “responsible for the financial performance of their content,” Iger said.

  • The old structure, he said, “severed that bond.”
  • The creative teams will be responsible for “what content we create, how it’s distributed and monetized, and how it’s marketed.”
  • “Managing costs, maximizing revenue and growing content produced will be their responsibility,” he added.

Between the lines: The new organizational structure, which will be implemented immediately, will divide the company into three parts:

  1. Disney entertainment: Dana Walden and Alan Bergman will lead the unit as co-presidents and oversee all of Disney’s entertainment, media and content businesses worldwide, including streaming. Walden rose through the ranks through Disney after joining the company in 2019 through its acquisition of Fox Entertainment Properties. Bergman has worked at Disney since 1996. He was previously co-president of Walt Disney Studios.
  2. ESPN: Jimmy Pitaro will continue as President of ESPN, overseeing ESPN Networks, ESPN+ and Disney’s international sports channels. Pitaro joined Disney in 2010. He has led a number of businesses in addition to ESPN, including Disney Interactive, consumer products and interactive media.
  3. Parks, Experiences and Disney Products: Josh D’Amaro will continue as chairman, overseeing Disney’s theme parks, resorts, cruises, consumer products, games and publishing businesses. D’Amaro has worked at Disney for more than two decades, holding positions at various parks and Disney Experiences units.

Disney Stock fell 44% in 2022, but rose 5% in after-hours trading following the announcement of the new changes and the announcement of the company’s fourth quarter results.

By the numbers: Disney’s non-content cost reductions will total approximately $2.5 billion, and already, $1 billion in savings are already underway.

  • The company expects to achieve approximately $3 billion in savings over the next few years, excluding sports.

To note : Disney is one of several media and tech companies to recently announce major layoffs, following in the footsteps of Amazon And Google.

  • Disney reported its first-ever subscriber loss for Disney+, likely due to a price hike for the service that took effect late last year, but the losses were still lower than what Wall Street expected.
  • Iger also put to bed any rumors that Disney was considering parting ways with ESPN.

And after: Like Netflix, Iger said Disney will no longer provide advice on long-term subscriber growth, as the company instead wants to prioritize “the sustainable growth and profitability of the company’s streaming business.”

  • Disney expects Disney+ to be profitable by the end of fiscal year 2024.

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