Disney is the third billion-dollar company so far this year to announce a massive layoff in a bid to cut costs. Microsoft announced it is letting go of 10,000 people, while Take-Two’s cost-cutting measures also include staff layoffs.
Disney announced that it plans to reorganize three segments of the company, cut up to 7,000 jobs and slash costs by $5.5 billion, including $3 billion in content.
Disney Entertainment will be one of the divisions affected by the reorganization. The division includes the Disney+ streaming service and other media operations of the company. ESPN and ESPN+ streaming service will also be part of the reshuffling within Disney.
This is the most significant move by Disney CEO Bob Iger since he returned to the company in November. The restructuring plan was announced during Disney's quarterly earnings call with investors last Wednesday.
"We will be reducing our workforce by approximately 7,000 jobs," Iger said during the earnings call. "While this is necessary to address the challenges we're facing today, I do not make this decision lightly. I have enormous respect and appreciation for the talent and dedication of our employees worldwide, and I'm mindful of the personal impact of these changes."
The job cuts represent 3% of the 220,000 employees of the company. The company employs 166,000 in the US and 54,000 internationally.
The job cuts come as Disney+ announced that it lost 2.4 million subscribers in the last quarter, which is a reduction of just 1%. The streaming service now has 162 million globally. Disney will also be slashing expenditures by $5.5 billion. The media giant joins the likes of Warner Bros. and Netflix in cutting content from their streaming services in a bid to cut costs.
Disney will cut $3 billion in content from its media division, excluding sports. $2.5 billion will be from non-content cuts. Around $1 billion in cost-cutting measures are already underway. Iger said it was time to "take a hard look at cost of everything we make across television and film."
"The streaming business, which I believe is the future and has been growing, is not delivering the kind of profitability or bottom-line results that the linear business delivered for us over all over a few decades," Iger explained. "And so we’re in a very interesting transition period, but one, I think, is inevitably heading towards streaming."
"We’re going to look at the volume of what we make and be fairly aggressive at better curation when it comes to general entertainment," Disney's CEO adds.
Disney’s stock rose 6% in the after-markets training following the announcement of the layoffs and cost-cutting measures.