Update:
Disney is set to begin its previously announced layoffs this week.
A memo seen by CNN from Disney CEO Bob Iger outlines how the layoffs, which will affect 7,000 roles, will occur in three separate rounds.
The first is set to begin this week, according to the memo. The second wave is set to take place in April and is expected to be the largest, with several thousand staffers laid off. The final of the three waves will hit before summer starts.
Original story below:
The mouse is about to clean house.
That was the message heard loud and clear at Disney CEO Bob Iger’s first earnings report since he came out of retirement to head up the global entertainment company.
In a bombshell call with analysts, Iger announced a sweeping corporate restructuring that will result in nearly 7,000 layoffs to save $5.5 billion in costs. The job cuts make up roughly 3.6% of Disney’s global workforce.
“While this is necessary to address the challenges we’re facing today, I do not make this decision lightly,” said Iger. “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.”
Related: Bob Iger Returns as Disney CEO and Bob Chapek Steps Down, Effective Immediately
A course correction comes at a cost
The House of Mouse is the latest U.S. company to initiate major job cuts, following in the footsteps of Google, Amazon, Facebook, and Zoom.
Iger said Disney wants to reanimate its film and TV business while cutting costs in “non-content” operations, such as marketing, labor, and technology.
“We must return creativity to the center of the company, increase accountability, improve results and ensure the quality of our content and experiences,” Iger said.
Iger said that the company would reorganize into three segments: an entertainment unit encompassing film, TV, and streaming, a sports-focused ESPN unit, and Disney parks, experiences, and products.
He emphasized that the company’s streaming services, which include Disney+, ESPN+, and Hulu, will remain its ” #1 priority”. But he added that “we’re not going to abandon the linear or the traditional platforms while they can still be a benefit to us and our shareholders.”
Wall Street reacts
While Disney employees can’t be happy about the news, Wall Street liked what they heard, as Disney shares surged 6% in after-market trading. After tanking in 2022, stock prices have increased 26 percent this year.
Iger shared quarterly P&L numbers that were better than many analysts expected.
Disney’s streaming subscribers were down only 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 reorg marks a new chapter for Iger, who first became Disney CEO in 2005 and retired in 2020, only to return in 2022.
