CEO Bob Iger said Disney will be restructuring into three divisions to ensure ‘sustained growth and profitability’ for the company.
The Walt Disney Company has become the latest business to announce layoffs as the entertainment giant plans to cut 7,000 jobs to make its streaming business profitable.
In its latest earnings report published yesterday (8 February), Disney reported quarterly growth in revenue of 8pc prompting CEO Bob Iger to call it a “solid” first quarter of fiscal year 2023. Iger returned the helm after less than one year away to replace Bob Chapek who was dismissed in November 2022.
However, the company’s streaming star Disney+ saw its total subscribers shrink after losing 2.4m subscribers in the latest quarter. This marks the first time Disney+ has lost subscribers since it was first launched in 2019.
While the core Disney+ subscriber saw an increase (1.4m) in subscribers over the last quarter, Disney+ Hotstar, the company’s streaming service in India, lost 3.8m subscribers.
Iger announced that Disney will be embarking on a “significant transformation” to maximise the potential of its creative teams, brands and franchises.
“We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges and deliver value for our shareholders,” he said.
One of the changes is a promise to reinstate a dividend for shareholders, addressing criticism that Disney was overspending on its streaming segment.
The company will also be restructuring into three segments: one unified entertainment unit that will include film, TV and other streaming services; a separate ESPN unit to focus on sports; and a segment for Disney’s original business of parks, experiences and products.
“This reorganisation will result in a more cost-effective, coordinated approach to our operations,” Iger said on a conference call. “We are committed to running efficiently, especially in a challenging environment.”
The latest layoffs represent approximately 3.6pc of the Disney’s global workforce and are expected to save the company $5.5bn in costs.
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Disney CEO Bob Iger in 2015. Image: Thomas Hawk via Flickr (CC BY-NC 2.0)