The Walt Disney Company is reducing its workforce by around 7,000 jobs to meet ambitious new cost-saving measures across the entire company.
“While this is necessary to address the challenges we are facing today, I do not make this decision lightly,” said CEO Bob Iger on the company’s Q1 earnings call yesterday. “I have enormous respect and appreciation for the talent and dedication of our employees worldwide, and I’m mindful of the personal impact of these changes.”
The cuts are part of a larger goal to achieve US$5.5 billion in cost savings across the company, which Iger announced during the call. The company aims to deliver US$3 billion in savings on the content side in the next few years through “better curation” and putting decisions around distribution and monetization back in the hands of creatives.
In Iger’s first earnings call since returning to Disney in November, he said that his plan also involves saving US$2.5 billion in non-content costs, with US$1 billion in savings already on track through scale-backs in selling, general and admin expenses, as well as other operating costs.
Iger is restructuring the company around three core business categories: Disney Entertainment, which includes all content and streaming; ESPN (ESPN networks, ESPN+ and sports channels); and Disney Parks, Experiences and Products. This approach aims to create a more cost-effective, coordinated and streamlined business, said Iger.
Under the new structure, one streamlined division will oversee all of Disney’s entertainment, with Alan Bergman and Dana Walden stepping into newly created roles as co-chairs of Disney Entertainment. Jimmy Pitaro will continue as chairman of ESPN, and Josh D’Amaro will continue as chairman of Disney Parks, Experiences and Products, which also includes cruises, games and publishing.
These organizational changes take effect immediately, said Iger.
Meanwhile, Disney’s revenue grew 8% to US$23.5 billion in Q1, compared to the same period last year. (Q1 2023 ended December 31, 2022).
The biggest increase was in parks, experiences and products, which climbed 21% to US$8.7 billion. Earnings in the media and entertainment distribution division rose 1% to US$14.7 billion.
Disney+ reached 161.8 million subscribers globally in Q1 (down 1% from Q4 2022), and is expected to reach profitability by the end of fiscal 2024, said Iger. He stressed that his top priority is to improve the economics of the company’s streaming business.
Another focus under Iger is on building out Disney’s core brands and franchises. As part of this, the company is producing sequels of popular animated franchises Toy Story, Frozen and Zootopia, and aims to get back into third-party licensing.
Looking ahead, Iger forecasts single-digit-percentage growth in revenue and segment operating income. While it’s a time of change at Disney, putting creativity first will drive the company to greater success, he said.
“It’s time for another transformation, one that rationalizes our enviable streaming business and puts it on a path to sustained growth and profitability, while also reducing expenses to improve margins and returns, and better positioning us to weather future disruption, increased competition and global economic challenges.”