Disney to lay off 7,000 staffers

Disney+ Hotstar subscriber count falls by 3.8 million over previous quarter

by Sonam Saini
February 09, 2023

The Walt Disney Company will be reducing its workforce by approximately 7,000 jobs, announced CEO Bob Iger during the Q1 FY23 earnings call on Thursday.

“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 am mindful of the personal impact of these changes.”

Iger shared that it's time for another transformation, “one that rationalizes the company's enviable streaming business and puts it on a path to sustain growth and profitability, while also reducing expenses to improve margins and returns and better positioning us to weather future disruption, increased competition and global economic challenges”.

“We must also return creativity to the center of the company, increase accountability, improve results, and ensure the quality of our content and experiences,” said Iger.

He further added that the company was fuelled by storytelling and creativity. “Virtually every dollar we earn every transaction, every interaction emanates from something creative. I've always believed that the best way to spur great creativity is to make sure the people who are managing the creative processes feel empowered.”

“Therefore, our new structure is aimed at returning greater authority to creative leaders and making them accountable for how their content performs financially. The company’s former structure severed that link and it must be restored.”

Iger informed moving forward the creative teams will determine what content they are making, how it is distributed and monetized and how it gets marketed. Managing costs, maximizing revenue and driving growth from the content being produced will be their responsibility, he said.

Iger noted that the reorganization will include three core business segments - Disney entertainment, ESPN, and Disney Parks experiences and products.

Alan Bergman and Dana Walden will be co-chairman of Disney entertainment, which will include the company's full portfolio of entertainment media and content businesses globally, including streaming.

Jimmy Petoro will continue to serve as Chairman of ESPN, which will include ESPN networks, ESPN Plus and international sports channels.

Josh D’Amaro will continue to be chairman of Disney Parks experiences and products, which will include theme parks, resort destinations and the cruise line, as well as Disney's consumer products, games and publishing businesses.

These organizational changes will be implemented immediately, he said, and will begin reporting under the new business structure by the end of the fiscal year. This reorganization will result in a more cost-effective, coordinated and streamlined approach to its operations. “And we are committed to running our businesses more efficiently, especially in a challenging economic environment.”

In that regard, Iger shared, “We are targeting $5.5 billion of cost savings across the company. First reductions to our non-content costs will total roughly $2.5 billion not adjusted for inflation. $1 billion in savings is already underway. But, in general, the savings will come from reductions in other operating costs across the company. To help achieve this we will be reducing our workforce by approximately 7,000 jobs.”

The company's overall Q1 DTC operating losses improved by over $400 million vs the prior quarter driven by higher revenue and lower SG&A costs, partially offset by higher programming and production costs. Across DTC services, the company has meaningfully reduced marketing expenses.