Disney’s CEO, Robert Iger, has announced that the company will lay off 7,000 employees in an effort to reduce costs. By October 1, 2022, Disney had around 220,000 employees worldwide, or 3.2% of the total.
Disney to reduce workforce in a bid to cut costs
Iger said, Lay off’s a part of Disney’s efforts to achieve about $5.5 billion in cost savings. Out of that, $2.5 billion represents non-content costs (including labor costs) and $1 billion of those targeted cost-reductions are already underway. Disney CFO Christine McCarthy said that Dysney is aiming for an annualized reduction of $3 billion in non-sports content costs, which is expected to be realized over the next several days.
Layoffs are a component of Disney’s efforts to save nearly $5.5 billion in costs, according to Iger. The non-content costs (which include labour costs) make up $2.5 billion of that total, and $1 billion of the projected cost reductions are already under way. The $3 billion annualised reduction in non-sports content costs that Disney is aiming for, according to CFO Christine McCarthy, is anticipated to be realised over the next days.
McCarthy added that non-content cost savings of $2.5 billion from non-content costs will “completely materialise” by the end of the fiscal year 2024. About 50% of non-content expenses are marketing expenses, 30% are marketing charges, and 20% are expenses for technology, purchasing, and other things.
Iger informed that decision to lay-off jobs were a tough call to make,
“I have enormous respect and appreciation for the dedication of our employees worldwide,”
On content front Iger said,
“We are going to a really hard look at everything we make [in general entertainment] because things in a more competitive world have simply gotten more expensive.”
Iger announces new operating structure for Disney, organized in three core business segments
Iger also unveiled a new organisational 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 reorganisation.
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.
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