The Walt Disney Company has announced plans to cut 7,000 jobs in a bid to save $5.5bn in costs and make its Disney+ streaming business profitable.
The decision was revealed during Disney’s quarterly earnings call on 8 February, the company’s first set of financial results since CEO Bob Iger came out of retirement.
Disney is also restructuring and will be made up of three divisions – an entertainment unit, a sports-focused ESPN segment, and Disney parks, experiences and products.
The latter will continue under the leadership of chairman Josh D’Amaro.
Iger said the reorganisation “will result in a more cost-effective, coordinated approach to our operations”. He added: “We are committed to running efficiently, especially in a challenging environment.”
“While this is necessary to address the challenges we face today, I do not make this decision lightly,” Iger said.
Despite the layoffs and restructuring, Disney’s theme parks segment is thriving. Revenue for the first quarter of 2023 increased by 21 percent to $8.7 billion.
Theme park revenue rises to $8.7bn
The division’s operating income increased by 25 percent to $3.1 billion. Operating income growth at Disney’s US parks was due to higher attendance and increased guest spending.
Disney noted growth at Disneyland Paris and higher royalties from Tokyo Disney Resort, but a decrease at Shanghai Disney Resort due to lower attendance as a result of Covid-19-related closures.
“After a solid first quarter, we are embarking on a significant transformation, one that will maximize the potential of our world-class creative teams and our unparalleled brands and franchises,” said Iger.
He continued: “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.”
Additionally, Iger said an “exciting Avatar experience” is coming to Disneyland Resort after the success of Avatar: The Way of Water and the Avatar-themed land at Animal Kingdom in Florida.
“We’re going to bring a version of Avatar to Disneyland,” Iger said on the call. No opening date was announced, but Iger said more information will be shared “very soon”.
The announcements come as Disney takes part in a proxy fight with activist investor Nelson Peltz and his Trian management firm.
“We are pleased that Disney is listening,” a spokesperson for Trian said.
Images: Disney
