Bob Iger, the CEO of Disney, has announced that the entertainment giant would undergo a significant restructuring that will eliminate 7,000 employees.
As part of a goal to save $5.5 billion and make its Disney+ streaming service profitable, the company is laying off employees. This comes after the service recorded its first drop in subscribers since 2019.
The statement that Mr. Iger made was that he “did not make this decision lightly.”
In addition, he disclosed the company’s first set of financial figures since his return in November, which showed that Disney+ is still suffering losses.
Mr. Iger said the following when he announced the layoffs: “I have immense regard and appreciation for the skill and dedication of our workers globally, and I’m cognizant of the human impact that these changes will have.”
He explained that the alterations would “position us better to weather future disruption and global economic concerns.”
The number of eliminated positions is approximately 3.6% of Disney’s total workforce. Between October and December of the previous year, Disney claimed a growth in sales of 8%, which brought the total to $23.5 billion (£19.45 billion). Profit increased as well, climbing 11% to $1.3 billion.
However, Disney+ reported a loss of $1.5 billion, and the number of subscribers dropped by approximately 2.4 million to 161.8 million.
The corporation will be reorganized according to the plan into three distinct divisions: the entertainment division, consisting of film, television, and streaming services; the sports-oriented ESPN division; and the Disney parks, experiences, and products division.
Mr. Iger remarked that “this restructure will result in a more cost-effective, unified approach to our operations” on a conference call with investors and analysts.
He went on to say that the streaming service offered by the corporation remained the organization’s primary focus.
Following the announcement, the price of Disney shares increased by more than 5 percent during extended trading.
The modifications are a response to some of the criticisms that were expressed in recent months by billionaire activist investor Nelson Peltz. Peltz said that Disney was overspending on its streaming business, and he criticized the company for this.
Mr. Peltz’s Trian Group issued the following statement in response to the announcement: “We are glad that Disney is listening.”
In a surprising move, Mr. Iger returned to work for Disney less than a year after announcing his retirement from the company.
After the firm’s share price plunged and Disney+ lost money, the board of directors decided to bring him back to manage the company through the challenging times ahead.
Mr. Iger, who had served as Disney’s CEO for the prior 15 years, was succeeded in that role by Bob Chapek, who became the company’s chief executive officer in February 2020.
Mr. Chapek was fired after the streaming segment of Disney’s business reported a quarterly loss of $1.5 billion.
Mr. Iger announced his intention to make significant changes to the company’s operations less than one day after he had returned to Disney.
He announced at the time that he had delegated authority for creating “a new structure that rationalizes spending and puts more decision-making back in the hands of our creative teams” to a team of executives.