Published - March 28, 2023 @ 10:59 AM (EET)
According to a memo sent to staff by Chief Executive Bob Iger, Disney (NYSE:DIS) will begin layoffs this week, the first of three rounds over the next two months, to reduce headcount by around 7,000 across the company.
As part of a $5.5 billion savings drive the company announced in February, the first group of workers will receive a notification over the next four days, Iger said. A second, more extensive round will happen in April, while the last affected employees will receive notice before summer.
Following the lead of Warner Bros. Discovery and other legacy media companies cutting jobs and spending, Disney has said its streaming business, led by Disney+, Hulu, and ESPN+, will stop losing money in 2024.
The company, which employed about 220,000 people worldwide as of 1 October 2022, plans to announce layoffs in all parts of the company, including theme parks and the ESPN sports networks.
Meanwhile, Walt Disney Co. has eliminated its next-generation storytelling and consumer experience unit, a small division that developed metaverse strategies, as part of its broader restructuring plans.
WHY IT MATTERS
Over the past few months, investors have pressured Disney to make deep cuts to nonessential businesses.
To help find cost-cutting opportunities, the company hired consultants from McKinsey & Co. last year. Moreover, the company started to rein in spending when Netflix (NASDAQ:NFLX) posted its first loss of subscribers in a decade in early 2022 when Wall Street began prioritizing profitability over subscriber growth.
"For our employees who aren't impacted, I want to acknowledge that there will no doubt be challenges ahead as we continue building the structures and functions that will enable us to be successful moving forward," Iger, who rejoined the company he led for 15 years in November, said.
While the company had closely guarded details of the layoffs, insiders anticipated reductions would happen before Disney's annual shareholders' meeting, with rumors swirling about areas of possible cuts.
"It's been a long time in the making," said SVB MoffettNathanson analyst Michael Nathanson.
Disney shares climbed 1.6% to close at $95.62 on Monday. The stock declined 44% in 2022, the second straight annual drop.
