The rat is about to clean the house.
That message was heard loud and clear in Disney CEO Bob Iger’s first earnings report since coming out of retirement to lead the global entertainment company.
In a bombshell call with analysts, Iger announced a sweeping corporate restructuring that would result in nearly 7,000 layoffs to save $5.5 billion in costs. The job cuts account for approximately 3.6% of Disney’s global workforce.
“It is necessary to address the challenges we face today, but I do not make this decision lightly,” Iger said. “I have great respect and admiration for the talent and dedication of our employees around the world, and I am conscious of the personal impact of these changes.”
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A course correction comes at a cost
Following in the footsteps of Google, Amazon, Facebook and Zoom, the House of Mouse is the latest US company to initiate major job cuts.
Iger said Disney is looking to revitalize its film and TV business while cutting costs in “non-material” operations such as marketing, labor and technology.
“We must return creativity to the heart of the company, increase accountability, improve outcomes and ensure the quality of our content and experiences,” Iger said.
Iger said the company would reorganize into three segments: an entertainment unit that includes film, TV and streaming, a sports-focused ESPN unit, and Disney Parks, Experiences and Products.
He emphasized that the company’s streaming services, which include Disney+, ESPN+, and Hulu, will remain its “#1 priority”. But he added that “we are not going to abandon linear or traditional platforms while they can still be of benefit to us and our shareholders.”
Wall Street reacts
While Disney employees may not be happy about the news, Wall Street liked what it heard, as Disney shares rose 6% in after-market trading. After tanking in 2022, stock prices are up 26 percent this year.
Iger shared quarterly P&L numbers that were better than many analysts were expecting.
Disney’s streaming subscribers were down only 1% from 164 million to 162 million. But ESPN+ and Hulu subscribers grew by 2% each. Disney’s theme parks made a profit of $2.1 billion, up 36 percent from the previous year.
The relaunch marks a new chapter for Iger, who first became Disney’s CEO in 2005 and retired in 2020, only to return in 2022.