Disney’s Bob Iger will lay off 7,000 workers as company cuts back on costs

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 Hollywood Reporter, will have only three divisions, 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 3 percent of its global workforce. The cuts are likely to predominantly affect the entertainment and ESPN divisions, even though the company beat analyst’s expectations for the quarter.

The changeup comes as Florida Gov. Ron DeSantis seizes control of Disney’s Reedy Creek Improvement District 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.