Disney cuts 7,000 jobs
Disney Faces Mounting Pressure from Billionaire Activist Investor - Here's What He Wants!
Disney, the media and entertainment giant, is undergoing a major transformation. The company has announced plans to reorganize into three segments, and also cut thousands of jobs and costs. This marks the most significant action taken by Bob Iger since he returned as CEO in November. The changes come as Disney is in a proxy fight with activist investor Nelson Peltz and his firm Trian Management.
"We are pleased that Disney is listening," says a Trian spokesperson.
Disney's three new divisions will be:
The company has also announced that it will be cutting $5.5 billion in costs, including $3 billion from content, excluding sports, and $2.5 billion from non-content cuts. Disney executives stated that about $1 billion in cost-cutting has already been underway since last quarter.
As part of the cost-cutting measures, Disney will eliminate 7,000 jobs from its workforce, representing about 3% of the roughly 220,000 people it employed as of Oct 1, 2021.
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Disney's stock rose about 5% in after-hours trading following the announcement.
Media companies like Warner Bros and Discovery have been looking to make their streaming businesses profitable, amid heightened competition and slowing subscriber growth. Disney and Netflix have added cheaper, ad-supported options to their services.
Bob Iger, Disney CEO, stated during a call with investors, "We will take a very hard look at the cost of everything we make across television and film."
The reorganization has been underway since Iger returned to the helm of Disney, replacing his hand-picked successor Bob Chapek. The entertainment group will be led by Dana Walden and Alan Bergman, who are both considered contenders to take over for Iger in the next two years. ESPN Chairman Jimmy Pitaro will lead the ESPN segment, and Josh D'Amaro, head of Disney's Parks, Experiences, and Products segment, will remain in control.
Iger addressed speculation that the company may look to spin out ESPN due to the sports network being siloed into its own unit. He noted that while ESPN has been struggling with cord-cutting, the ESPN brand and programming remain healthy and in demand. "We're not engaged in any conversations or considering a spinoff of ESPN," he said.
In conclusion, Disney's restructuring is a major step forward, as the company aims to rationalize costs and put "decision-making back in the hands of our creative teams." As Bob Iger himself says, "Our company is fueled by storytelling and creativity, and virtually every dollar we earn, every transaction, every interaction with our consumers, emanates from something creative."