Disney CEO Bob Iger says he will cut 7,000 jobs as part of a major restructuring of the entertainment giant.
The layoffs are part of a plan to save $5.5 billion and make Disney’s streaming service profitable. The number of subscribers to the service fell for the first time since the service was launched in 2019.
Mr. Iger said he “did not take this decision lightly.”
Commenting on the layoffs, Mr. Iger said, “I have tremendous respect and appreciation for the talent and dedication of our employees worldwide, and I am aware of the personal impact of these changes.”
He said the changes will help us better withstand future disruptions and global economic challenges. The job cuts represent approximately 3.6% of Disney’s global workforce. Disney reported an 8% increase in sales to $23.5 billion (£19 billion) between October and December last year. Profits also rose 11% to $1.3 billion.
However, Disney reported a loss of $1.5 billion, and its subscribers fell by about 2.4 million to 161.8 million.
The company is planned to be restructured into three segments: entertainment, which includes movies, television, and streaming; sports-focused ESPN; and Disney parks, experiences, and products.
“This reorganization will result in a more cost-effective and coordinated approach to our operations,” Mr. Iger told analysts on a conference call.
The company’s streaming service remained its top priority, he added.
Shares of Disney rose more than 5% in extended trading after the announcement.
Freddy Colquhoun, chief investment officer at JM Finn, told the BBC: “Disney has had quite a few problems over the last year and has struggled to make a profit on its streaming business.”
But he said the results were “really convincing” and exceeded expectations.
Disney’s changes are related to some of the criticism that billionaire activist investor Nelson Peltz has made in recent months. He criticises the company for being too involved in the streaming business.
Peltz’s Trian Group said in response to the announcement, “We’re glad Disney is listening.”
Mr. Iger shockingly served as CEO of Disney less than a year after retiring from the company. He was brought back to lead the company during turbulent times after the stock price crashed and Disney continued to lose money.Mr. Iger, who led Disney for 15 years, replaced Bob Chapek, who became CEO in February 2020. Mr. Chapek was ousted after Disney’s streaming company posted a loss of $1.5 billion in the quarter.
Less than 24 Hours after returning to Disney, Mr. Iger said he was planning a big change in the business.
At the time, he said he tasked the group’s executives with designing “a new structure that puts more decision-making power in the hands of our creative teams and rationalises costs.”
The changes came with the latest quarterly data, his first since returning to Disney in November.