Disney to cut 7,000 jobs worldwide as part of restructuring

Walt Disney Co announced on Wednesday a sweeping restructuring under the mandate of Bob Igerrecently reinstated with the company, cutting 7,000 jobs as part of an effort to save $5.5 billion in costs and make its streaming business profitable.

Layoffs represent approximately 3.6% of the global workforce Disney.

Shares of the company rose 4.7% to $117.22 in after-hours trading.

The moves, which include a promise to reinstate a shareholder dividend, responded to some of the criticism from investor Nelson Peltz, who said the House of Mouse was spending too much on streaming.

Iger acknowledged Wednesday that Disney may have been too aggressive in its quest to capture online video customers in the face of the decline of traditional television.

As part of a plan to cut costs and return power to creative executives, the company is being restructured into three segments: an entertainment unit that encompasses film, television and streaming; a unit ESPN sports-focused; and finally Disney parks, experiences and products.

“This reorganization will lead to a more profitable and coordinated approach to our operations,” Iger told analysts in a conference call. “We are committed to operating efficiently, especially in a challenging environment.”

Iger also noted that streaming remained Disney’s top priority.

Third restructuring in five years

Disney is the latest media company to announce job cuts in response to slowing subscriber growth and increased competition for streaming viewers.

The company earlier reported its first quarterly decline in subscriptions for its Disney+ streaming unit, which was losing more than $1 billion.

Previously, Warner Bros Discovery Inc y Netflix Inc They made layoffs.

Disney said it planned to cut $2.5 billion in sales and general administrative expenses and other operating costs, an effort that is already underway. Another $3 billion in savings would come from reductions in non-sports content, including layoffs.

Adjusted earnings per share were 99 cents in the fiscal first quarter, ended December 31, beating the 78-cent Refinitiv median estimate.

Net earnings were $1.279 million, below analysts’ estimate of $1.429 million. Revenue reached $23.512 million, above Wall Street estimates of $23.4 billion.

The shakeup marks a new chapter in the leadership of Iger, whose first tenure as CEO began in 2005. He went on to bolster Disney with a roster of powerful entertainment brands, acquiring Pixar Animation Studios, Marvel Entertainment y Lucasfilm.

The CEO repositioned the company to capitalize on the streaming revolution, acquiring the film and television assets of 21st Century Fox in 2019 and launching the streaming service Disney+ that fall.

Iger left the role in 2020, but returned to the role in November 2022 to try to put Disney’s streaming business on a path of growth and profitability. The new structure also fulfills its promise to return decision-making to the company’s creative leaders, who will determine which movies and series to make and how the content will be distributed and marketed.