The media brand Disney Store in London, United Kingdom on Sept. 7, 2022. Photo: Mike Kemp/In Pictures via Getty Images
Walt Disney Company announced Wednesday on a call with investors that it expects to cut 7,000 jobs this year — or about 3.6% of its global workforce — as part of a broader restructuring plan and a bigger effort to save $5.5 billion in costs.
The big picture: In light of financial pressure from Wall Street, CEO Bob Iger reiterated his plan to make Disney more efficient while also bolstering the company's streaming business.
- Iger had vowed to reorganize the company when he was renamed CEO late last year, undoing most of the organizational changes made under former CEO Bob Chapek
Details: Disney will be aiming to return greater authority to the company's creative leaders and would make "them accountable to how their content performs financially," Iger said.
- The former structure, he said, "severed that link."
- Creative teams will be responsible for "what content we're making, how it is distributed and monetized, and how it gets marketed."
- "Managing costs, maximizing revenue, and driving growth from the content being produced will be their responsibility," he added.
Between the lines: The new organizational structure, which will be implemented immediately, will divide the company into three parts:
- Disney entertainment: Dana Walden and Alan Bergman will lead the unit as co-chairs, and will oversee all of Disney's entertainment, media and content businesses globally, including streaming. Walden rose the ranks through Disney after joining the company in 2019 through its acquisition of Fox's entertainment properties. Bergman has been with Disney since 1996. He was formerly co-chairman of Walt Disney Studios.
- ESPN: Jimmy Pitaro will continue to serve as ESPN's chairman, overseeing ESPN networks, ESPN+ and Disney's international sports channels. Pitaro joined Disney in 2010. He has led a number of businesses in addition to ESPN, including Disney Interactive and consumer products and interactive media.
- Disney Parks, Experiences and Products: Josh D'Amaro will continue serving as chairman, overseeing Disney's theme parks, resorts, cruises, consumer products, games and publishing businesses. D'Amaro has been with Disney for more than two decades, spanning roles across various Disney parks and experiences units.
Disney stock dropped 44% in 2022, but was up 5% in after-hours trading after the new changes and the company's fourth-quarter earnings report were announced.
By the numbers: Reductions to Disney's non-content costs will total roughly $2.5 billion, and already, $1 billion in savings is already underway.
- The company expects to deliver approximately $3 billion in savings over the next few years, excluding sports.
Of note: Disney is one of several media and tech companies to recently announce major layoffs, following in the footsteps of Amazon and Google.
- Disney reported its first-ever subscriber loss for Disney+, likely due to a price hike for the service that went into effect late last year, but losses were still smaller than what Wall Street was expecting.
- Iger also put to bed any rumors that Disney was considering spinning off ESPN.
What's next: Like Netflix, Iger said Disney will no longer provide long-term subscriber growth guidance, because the company wants to instead prioritize "enduring growth and profitability in the company's streaming business."
- Disney expects that Disney+ will be profitable by the end of fiscal year 2024.