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Disney to lay off 7,000 employees as it cuts $5.5 Billion in costs
Disney to lay off 7,000 employees as it cuts $5.5 Billion in costs
CEO Bob Iger is planning to cut company costs as Disney Plus added just 200,000 subscribers in the US and Canada.
Disney plans to lay off 7,000 workers to cut costs across the company. CEO Bob Iger announced the news on an earnings call on Wednesday, saying that the step is - "necessary to address the challenges we're facing today."
Like many other businesses across the country, Disney is taking this step to reduce costs in a "challenging economic environment." Iger says he is "targeting $5.5 billion of cost savings across the company" and that the layoffs will "help achieve that." However, Iger did not say which departments the layoffs would affect. Layoff rumours began to surface shortly after Iger took over from outgoing Disney CEO Bob Chapek last November. In 2020, Iger stepped down from the role, and the acquisition of him has already led to significant organizational changes for the company. Iger is also establishing three main divisions in the company: ESPN, Disney entertainment, and Disney Parks experiences and products.
Iger still has plans set on streaming despite a slowdown in subscriber growth. For example, Disney Plus added only 200,000 subscribers in Canada and the US for a total of 46.6 million, whereas its international offering (excluding HotStar) saw the addition of 1.2 million members. Hulu and ESPN Plus had similar slow growth, adding 800,000 and 600,000, respectively. Disney's direct-to-consumer division, which offers its streaming services, saw a 13 per cent revenue increase to $5.3 billion. But it still faced an operating loss of about $1.1 billion, which the company attributed to higher costs at Disney Plus and Hulu. The company's streaming business lost about $1.5 billion last quarter.
"Our priority is the enduring growth and profitability of our streaming business," Iger says. "Our current forecasts indicate Disney Plus will hit profitability by the end of fiscal 2024, and achieving that remains our goal."
Given that the results span the last three months of 2022, it's still very early to tell what effect the ad-supported tier of $7.99 per month will have on Disney Plus subscriber numbers. More people may be leaving the service now that the three-year package launched with Disney Plus launch began to expire. While Disney offers a bundled plan with Disney Plus, Hulu, and ESPN Plus, it's more costly than the original offering and reflects last year's price increases.
