The axe is swinging now that Bob Iger is back in charge of Disney.
Iger announced the plan to decrease costs by 7,000 people during the company’s earnings call on Wednesday for the quarter ending December 31, 2022. As of October 1, 2022, the figure corresponds to 3.2% of Disney’s approximately 220,000 global employees.
Disney’s plans to save around $5.5 billion in costs include the layoffs. According to Iger, $2.5 billion of that amount is made up of “non-content costs” (such as labor costs), and $1 billion of those targeted cost reductions are already in progress. According to Disney CFO Christine McCarthy, the company is trying to cut non-sports programming costs by $3 billion annually, a reduction that should be realized over the next years.
According to McCarthy, of the $2.5 billion in non-content expenses, around 50% are related to marketing, 30% to personnel costs, and 20% are related to technology, purchasing, and other costs. By the end of its fiscal year in 2024, Disney anticipates the cost savings to “completely materialize.”
Iger claimed that he did not make the choice to eliminate employment haphazardly. He remarked, “I have great respect and appreciation for the commitment of our people around the world.
Iger stated that “We are going take a really hard look at everything we do [in general entertainment] because things in a more competitive world have just gotten more expensive” in regards to content.
Iger also unveiled a new organizational structure for Disney, divided into three key business units: Disney Entertainment, managed by co-chairs Dana Walden and Alan Bergman; ESPN, under the direction of Jimmy Pitaro; and Disney Parks, Experiences, and Products, under the direction of Josh D’Amaro. The Disney Media and Entertainment Distribution (DMED) group, founded by former CEO Bob Chapek in 2020, is dismantled as a result of the reorganization.
Disney outperformed Wall Street forecasts for both the top and bottom lines for the December 2022 quarter. Due to losses at Disney+ Hotstar, the service’s version available in India and several regions of Southeast Asia, Disney+ saw its first-ever dip in subscribers during the time, dropping by 2.4 million.