Disney Shares Rally After Beating Q1 2023 Estimates, Announcing 7,000 Job Cuts
The Walt Disney Company (NYSE: DIS) has announced a massive corporate restructuring that will result in the layoff of 7,000 individuals as part of an effort to save $5.5 billion in costs. The layoffs are projected to constitute 3.6% of Disney’s global workforce.
“While this is necessary to address the challenges we’re facing today, I do not make this decision lightly. 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,” said CEO Bob Iger in his first earnings call since returning to the role.
Iger stepped down as chief executive in 2020, but returned to the position in November 2022.
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After the bell on Wednesday, Disney published quarterly earnings that showed a beat on both the top and bottom lines as demand for the company’s theme parks climbed throughout the holiday season.
The firm’s streaming service, Disney+, saw its subscriber base fall somewhat in the first quarter, as expected, due to the lack of the Indian Premier League cricket event on its Indian brand, Disney+ Hotstar.
Streaming losses fell to $1.1 billion in Q1 from $1.5 billion in the previous quarter, exceeding the company’s previous projection, thanks to Disney’s ad-supported tier and recent price increases.
However, the company saw its net income hit $1.28 billion, falling below analyst estimates of $1.43 billion.
On the same call, Iger previewed Toy Story, Frozen, and Zootopia sequels, telling investors that the planned films demonstrated how “we are leaning into our unrivaled brands,” and emphasized the value of franchises.
Disney is the latest media behemoth to announce job losses as subscriber growth slows and competition for streaming consumers heats up. Previously, Warner Bros. Discovery and Netflix laid off employees.
“The streaming business, which I believe is the future and has been growing, is not delivering the kind of profitability or bottom-line results that the linear business delivered for us over a few decades,” Iger said. “And so we’re in a very interesting transition period, but one, I think, is inevitably heading towards streaming.”
The company also announced plans to reduce $2.5 billion in sales and general administration expenses, as well as other operating costs, an endeavor that is already underway. Reduced non-sports content, including layoffs, would save an additional $3 billion.
The last time Disney conducted layoffs was at the height of the pandemic, when it announced in November 2020 that it would lay off 32,000 employees, largely at its amusement parks.
Disney last traded at $113.28 on the NYSE.
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