Disney will undergo its third restructuring in five years with a layoff of 7,000 employees in an attempt to make its streaming business profitable, according to a report by Reuters.
The $5.5 billion in cuts represent approximately 3.6% of the company’s workforce, with the second stint of CEO Bob Iger promising to focus on shareholders and executives’ needs.
The news comes after Disney+, the company’s flagship streaming platform, posted a quarterly loss in subscribers for the first time since its launch in 2019. Subscribers had appeared to bounce back from a record low subscriber gain in Q4 2021, but Q1 2023 saw a loss of 2.4 million subscribers.
Iger’s plan alleges it will return power to creative executives during a restructuring plan that is more “cost-effective.” The outline is for three segments that include an entertainment unit for film, TV, and streaming; an ESPN-centric unit; and a third unit dedicated to Disney parks and experiences.
“This reorganization will result in a more cost-effective, coordinated approach to our operations,” Iger said on a public call. “We are committed to running efficiently, especially in a challenging environment,” he added.
Cuts will come from sales and general administration, combined with a cut to operating costs. This will amount to approximately $2.5 billion. The remaining $3 billion stems from cuts in content in everything but sports, including the layoffs.
ESPN will continue to be lead by the same team, with no significant announcements about the brand. Streaming remains Disney’s top priority, which had been criticized by shareholders for overspending. As well, the cartoon giant intends to focus on “core brands and franchises,” with multiple mentions of curating “general entertainment” content.
Iger also intends to attempt to fulfill a promise to shareholders by reinstating their dividends, saying he would ask the board of directors to reimplement dividends by the end of 2023.
Promises and cuts resulted in shares of Disney rising 4.7%.
Disney’s most recent cuts were at its theme parks in 2020, when government shutdowns forced the company to get rid of 32,000 employees.
Like Blaze News? Bypass the censors, sign up for our newsletters, and get stories like this direct to your inbox. Sign up here!