The mouse is about to clean the house.
That was the message heard loud and clear in Disney CEO Bob Iger’s first earnings report since he retired from leading the global entertainment company.
In a call to analysts, Iger announced a major corporate restructuring that will result in nearly 7,000 layoffs to cut $5.5 billion in costs. The job cuts make up about 3.6% of Disney’s global workforce.
“While this is necessary to address the challenges we face today, I am not taking this decision lightly,” said Iger. “I have the utmost respect and appreciation for the talent and dedication of our employees worldwide, and I am aware of the personal impact of these changes.”
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A course correction entails costs
The House of Mouse is the latest US company to cut major jobs, following in the footsteps of Google, Amazon, Facebook and Zoom.
Iger said Disney wants to resuscitate its film and TV business while cutting costs in “non-substantive” operations, such as marketing, labor and technology.
“We need to put creativity back at the heart of the business, increase accountability, improve results and ensure the quality of our content and experiences,” said Iger.
Iger said the company would reorganize into three segments: an entertainment unit that spans film, TV and streaming, a sports-focused ESPN unit and Disney Parks, Experiences and Products.
He stressed that the company’s streaming services, including Disney+, ESPN+ and Hulu, will remain their “number 1 priority.” But he added that “we will not abandon linear or traditional platforms as long as they can still benefit us and our shareholders.”
Wall Street responds
While Disney employees may not be happy with the news, Wall Street was pleased with what they heard as Disney shares rose 6% in aftermarket trading. After tanking in 2022, stock prices are up 26 percent this year.
Iger shared quarterly P&L numbers that came in better than many analysts had expected.
Disney’s streaming subscribers fell just 1%, from 164 million to 162 million. But ESPN+ and Hulu subscriber numbers were up 2%. Disney’s theme parks brought in $2.1 billion in profit, up 36 percent from last year.
The reorganization marks a new chapter for Iger, who first became CEO of Disney in 2005 and retired in 2020, only to return in 2022.