Disney Cuts 7,000 Jobs In Effort To Make Streaming Profitable
Disney's CEO Bob Iger has performed his first major restructuring of the company since returning to his role as CEO in November 2022. Thousands of workers are set to be laid off in an attempt to make the company's streaming service profitable. The company currently owns a majority stake in Hulu and ESPN+, which operate alongside its flagship service Disney+. This marks Disney's third streaming-based restructure in a five-year period.
According to Reuters, the company underwent a restructuring in order to get its streaming service off the ground back in 2018. This was followed by another attempt to boost its streaming service's prospects by restructuring the company in 2020. That year also saw Disney lay off a staggering 32,000 workers in response to the coronavirus pandemic — with lockdowns, travel restrictions, and public worries hitting the normally lucrative theme park-based side of the business particularly hard.
Iger, who signed off on the layoffs, is currently trying to steady the ship after his chosen successor's short tenure did not go as planned. Bob Chapek took the helm of the entertainment giant after Iger initially retired, but his spell in charge saw the company's direct-to-consumer division lose $1.5 billion. Disney's response to Florida's "Don't Say Gay" bill, and the controversy around it, may have been the final nail in the coffin for Chapek. He was replaced by Iger who agreed to come back for a two-year stint.
Will the layoffs help Disney's streaming business?
Disney's latest cuts will see 7,000 staff shown the exit door — that's over 3.5% of Disney's total workforce. If Bob Iger's math is correct, the cuts will slash the entertainment giant's costs by $5.5 billion. The company as a whole is being split into three areas. Streaming services have their own segment which will be shared with "television" and "entertainment," while "parks, experiences, and products" also gets its own segment. A final segment will focus on "Sports" and will include ESPN. The market responded positively to the news, with Disney's stock price jumping by 8% following the announcement. Shareholders may also have their dividend restored at the end of the year, should the CEO get his way.
Iger sounds confident that the latest reshuffle is needed to get Disney's house in order. Speaking about the layoffs and the reshuffle, he says: "This reorganization will result in a more cost-effective, coordinated approach to our operations. We are committed to running efficiently, especially in a challenging environment." Disney isn't the only technology and entertainment company to make staff cuts in recent months. The industry as a whole is rushing to restructure following the end of the coronavirus pandemic boom period. Spotify, Amazon, and Meta are amongst the big names that have severed ties with thousands of staff members in a bid to cut costs.