Disney’s Bob Iger is planning to lay off 7,000 employees in a ‘significant transformation’ to cut back costs as he eliminates some of his predecessor’s efforts.
On Wednesday, Iger announced his plans to restructure the company, effectively eliminating the Disney Media and Entertainment Distribution group set up under former CEO Bob Chapek.
The new structure, according to the , will have only three divisions, biosolutions.kr Disney Entertainment — which will include film and TV assets as well as Disney+; ESPN — which will include ESPN and ESPN+; and Parks, Experiences and Products — which will include theme parks and the consumer products team.
As part of that changeup, Disney will cut 7,000 jobs — representing a little over three percent of its global workforce.The cuts are likely to predominantly affect the entertainment and ESPN divisions, despite the company beating analyst’s expectations for the fourth quarter of 2022.
The changeup comes as Gov.Ron DeSantis and the company faces a proxy battle with an activist investor seeking to gain a seat on the board.
Disney CEO Bob Iger is planning to lay off some 7,000 employees as he restructures the company
In announcing the new structure Wednesday, Iger likened it to changes he made at the media giant in 2005, when he first became CEO, and in 2016, when Disney announced a shift to streaming as it bolstered its assets with the acquisition of 21st Century Fox.
‘Our new structure is aimed at returning greater authority to our creative leaders and making them accountable for how their content performs financially,’ he said on an earnings call.
‘Our former structure severed that link and must be restored,’ he continued, noting: ‘Moving forward, our creative teams will determine what content we’re making, how it’s distributed and monetized and how it gets marketed.’
Under the plans, Alex Bergman and Dana Walden will co-chair the Disney Entertainment division, with Jimmy Pitaro continuing to lead ESPN and Josh D’Amaro continuing to lead parks and experiences.
And, in addition to the planned layoffs, Disney CFO Christine McCarthy also said the company is targeting $5.5billion in cost savings, including $3billion related to future content savings with the remaining $2.5billion coming from existing marketing, staffing and technology costs.
But the move comes as Disney beat earnings expectations.
The company announced on Wednesday that it earned $1.28billion, or 70 cents per share, in the three months through December 31, up from a net income of $1.1billion, or 60 cents per share a year earlier.
Excluding one-time items, Disney earned 99 cents per share.Analysts, on average, were expecting adjusted earnings of 78 cents per share, according to FactSet.
In total, revenue grew eight percent to $23.51 billion from $21.82 billion a year earlier. Analysts were expecting revenue of just $23.44 billion.
The company also said Disney+ ended the quarter with 161.8million subscribers, down one percent since October 1, while Hulu and ESPN+ each posted a two percent increase in paid subscribers.
Following the news, shares of Disney rose three percent in after-hours trading.
Much of the layoffs are expected to be in the entertainment division, which includes Disney+, as well as ESPN, which includes ESPN+
Disney ended the fourth quarter of 2022 with $1.28billion, liY or 70 cents per share
Disney shares ticked upwards following the earnings call on Wednesday
But Disney has been under fire recently by billionaire investor Nelson Peltz, who has claimed Iger is not fit to lead the company, citing falling revenues.
Last week, beulah.kr Peltz — the founder of Trian Management — sent a letter to Disney shareholders on Thursday asking them to vote for him rather than longtime board member Michael BG Froman.
It was just the latest move Peltz made in his ongoing war with Disney, after previously filing paperwork with the United States Securities and Exchange Commission for a seat at the Mickey Mouse table and launchive got to be kidding me.”‘
‘Well, this puts that to bed and so those debts will be honored,’ he continued.
‘This is now obviously going to be controlled by the state of Florida. There’s a new sheriff in town.’
Reedy Creek owes $700 million in debt to Florida due to it’s 56 years as a tax exempt district governed entirely b y Disney’s five-member board
A new bill would give the governor full control over the district, and the ability to appoint the five-member board of supervisors that run the special district. The nominees would then need to be confirmed by Florida state senators.
The proposed legislation would prevent anyone who has ties to the theme park from serving on the new board, while keeping in place its obligation to pay almost $1billion in outstanding bonds.
It would also term-limit board members and put the governor in charge of nominating members – as well as allowing Florida to impose taxes and laws on Disney and the district its resort encompasses.
Additionally, the bill would ensure Disney is held responsible for paying more than $700 million in unsecured debts and makes sure that doesn’t fall on Florida taxpayers.
‘These actions ensure a state-controlled district accountable to the people instead of a corporate-controlled kingdom,’ DeSantis’ deputy press secretary Jeremy Redfern told DailyMail.com
If approved, the legislation would permanently eliminate Disney’s ability to self-govern the area spanning Orange and Osceola counties in Florida.
And the Reedy Creek Improvement District will be renamed the Central Florida Tourism Oversight District.
Walt Disney World president Jeff Vahle released a statement on the proposed legislation, saying the company is ‘monitoring the progression’ of the legislation.
‘Disney works under a number of different models and jurisdictions around the world, and regardless of the outcome, we remain committed to providing the highest quality experience for the millions of guests who visit each year.’