Disney will be cutting off over 7,000 jobs this year. The information was shared by CEO Bob Iger, who says it was “not an easy choice”. The decision comes soon after Google cut over 12000 jobs in a single day.
The layoffs are part of a plan to save $5.5 billion and turn its Disney+ streaming service, which saw its first drop in subscribers since it started in 2019, into a profitable business.
Mr. Iger said that he did not make this choice easily. The changes came with its latest quarterly numbers, which were his first at Disney since he went back in November.
Talking about the job cuts, “I have a lot of respect and appreciation for the talent and hard work of our employees around the world, and I’m aware of how these changes will affect them personally.”
He said that the changes would “put us in a better position to handle future disruptions and problems in the global economy.”
About 3.6% of the people who work for Disney around the world will lose their jobs. Between October and December of last year, Disney’s sales went up 8% to $23.5 billion, which is about £19.4 billion. Profits went up as well, by 11%, to $1.3bn.
But Disney+ lost $1.5 billion, and the number of people who signed up for it dropped by 2.4 million to 161.8 million.
Under the plan, the company will be split into three parts: entertainment, which will include movies, TV, and streaming services; ESPN, which will focus on sports; and Disney parks, experiences, and products.
On a conference call with analysts, Mr. Iger said, “This reorganisation will lead to a more coordinated and cost-effective way to run our business.”
He also said that the company’s streaming service was still its top priority.
The news made the price of Disney shares go up by more than 5% in after-hours trading.
Freddy Colquhoun, investment director at JM Finn, told the BBC, “Disney has had a lot of trouble in the last year or so, especially with trying to make its streaming business profitable.”
But he said that the results were “really reassuring” and that they were better than expected.
Some of the problems that billionaire activist investor Nelson Peltz had with Disney in recent months were fixed by the changes. Peltz said that Disney was spending too much on its streaming business.
In response to the announcement Mr Peltz’s Trian Group said: “We are pleased that Disney is listening.”
Mr. Iger shocked everyone by coming back to Disney as CEO less than a year after he had left the company.
After the share price of the company dropped and Disney+ continued to lose money, he was brought back to lead the company through these rough times.
Bob Chapek, who took over as CEO in February 2020, replaced Mr. Iger, who had been in charge of Disney for 15 years.
Mr. Chapek was fired after Disney’s streaming service lost $1.5 billion in a quarter.
Less than 24 hours after he got back to work at Disney, Mr. Iger said he had big plans for the company.
At the time, he said he had given a group of executives the job of making “a new structure that puts more decision-making back in the hands of our creative teams and rationalises costs.”