ALBAWABA — Walt Disney Co. announced on Wednesday that it was laying off 7,000 employees as part of a restructuring and $5.5-billion-cost-savings plan.
The layoffs represent 3.18 percent of Disney's total global headcount of about 220,000 worldwide as of Oct. 1, 2022, according to Macrotrends, a 15.79 percent increase from 2021.
The company plans to reduce $3 billion from its movies and TV shows budget and $2.5 billion from non-content related areas.
The restructuring plan intends to improve profit margins, Iger said of his third major business transformation following acquisitions to beef up its film franchises along with developing its online business.
The company will be restructure into three divisions: an Entertainment Unit that includes its main TV, film and streaming businesses; the ESPN Unit that includes all of its sports networks; and the Theme-Park Unit, which includes cruise ships and consumer products, Disney’s CEO also announced.
"I do not make this decision lightly," Disney’s Chief Executive Officer Robert Iger, who returned as CEO last year, said on a call to analysts after the company posted its latest quarterly earnings.
Disney Group saw revenues grow by 8 percent to 23.5 billion for its first quarter that ended on Dec. 31, 2022, better than analysts predicted.
Revenue from its parks division increasing 21 percent to $8.74 billion and earnings climbing 25 percent to $3.05 billion.
Revenue from Disney’s traditional broadcast and cable TV business fell 5 percent to $7.29 billion, while operating income slumped 16 percent to $1.26 billion, hurt by weakness outside the United States.
Losses in its streaming business more than doubled to $1.05 billion year-over-year, as subscribers to Disney+ fell 1 percent to 161.8 million customers on December 31, compared to the prior quarter, its first ever fall as consumers cut back on spending.
"After a solid first quarter, we are embarking on a significant transformation, one that will maximize the potential of our world-class creative teams and our unparalleled brands and franchises," said Iger in a statement. "We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders."
Disney stock which had declined about 22 percent in the 12 months through Wednesday, rose as much as 9.6 percent in extended trading after the announcement, and climbed 1.5 percent to 113.46 at 12:50pm in New York on Thursday.
