As part of a multibillion-dollar cost-cutting strategy aimed at streamlining the company’s operations amid a time of media industry instability, Disney said that it would remove 7,000 employees from its global workforce, according to CNN Business.
Disney had about 220,000 workers as of October 1, of which approximately 166,000 were employed in the US. A cut of 7,000 jobs represents about 3 percent of its global workforce.
“While this is necessary to address the challenges we’re facing today, I do not make this decision lightly,” said CEO Bob Iger, who returned to lead the company in November when the board fired Bob Chapek as the company’s leader. “I have enormous respect and appreciation for the talent and dedication of our employees worldwide, and I’m mindful of the personal impact of these changes.”
Iger also took steps to reward shareholders, CNN Business reported, noting that Disney employees will be affected by the job cuts announcement and that the firm had halted dividend payments during the pandemic. Iger stated they anticipate that to occur repeatedly.
“Now that the pandemic impacts on our business are largely behind us, we intend to ask the board to approve the reinstatement of a dividend by the end of the calendar year,” he said. “Our cost-cutting initiatives will make this possible. And while initially, it will be a modest dividend, we hope to build upon it over time.”
The job cuts are a result of cost-cutting measures that were also revealed on Wednesday. Iger reportedly stated to CNN Business that the business aims to save USD 5.5 billion overall, with USD 2.5 billion of those savings coming from annual cost reductions in “non-content” operations. Business divisions like movies and television shows are referred to as content operations.
According to CNN Business, the company claimed that labor savings would account for 30% of cost savings, technology, procurement, and other expenses would account for 20% of cost savings, and marketing expenses would account for 50% of cost savings. Disney is a major advertiser, so a USD 1 billion decrease in annual marketing spending portends additional problems for other media and tech firms.
The sweeping job cuts were announced by Iger after the company released better-than-expected financial results for the fourth quarter of 2022. According to CNN Business, Disney’s revenue in the quarter rose 8 percent to USD 23.5 billion, edging past estimates of USD 23.4 billion from analysts surveyed by Refinitiv.
Although somewhat lower than a year earlier, earnings per share, which came in at 99 cents before special items, well exceeded expectations. This is lower than the USD 1.06 per share it made on that basis a year ago, but it is still far above than CNN Business’s projection of 78 cents per share.
