Disney Restructures: Cuts 7K Jobs, $5.5B In Expenses

Walt Disney Co. said it plans to trim 7,000 jobs and eliminate $5.5 billion in costs as part of a major corporate reorganization that gives more power to the company’s content executives and puts a greater emphasis on sports media at the company. 

The Wall Street Journal reports the announcement of layoffs and cuts come in the first earnings report since Robert Iger returned to the role of chief executive in November.

“It’s time for another transformation,” Iger said on the company’s earnings call. He said the changes would, among other things, reshape the company around creativity, reduce expenses and lead to profits in its streaming business.

Disney on Wednesday also reported better-than-expected sales and earnings for its December quarter, as well as a narrower loss in its streaming business and a decline in the number of Disney+ subscribers.

Iger and the company face pressure from activist investor Nelson Peltz, whose Trian Fund Management LP last month launched a proxy campaign against Disney with the goal of convincing shareholders to add him to Disney’s board of directors. In addition, Disney is facing questions about the health of its streaming business, what to do with Hulu and ESPN, and how to navigate a challenging economic climate with its debt-heavy balance sheet.

Investors and employees have been waiting for months for details about the reorganization, which Mr. Iger put in the hands of a committee known internally as the “Fabulous Four,” made up of Chief Financial Officer Christine McCarthy, studio chairman Alan Bergman, ESPN head James Pitaro and television chief Dana Walden.

Iger said Wednesday that the company plans to organize its movie and television studios, its linear television networks and its flagship streaming video services under a newly-created division known as Disney Entertainment, co-chaired by Bergman and Walden.

The rest of Disney’s businesses will be organized under the existing parks, experiences and products division and the ESPN business, led by their current chiefs, Josh D’Amaro and James Pitaro.

The new structure, which is intended to give creative executives more control over decisions about what content to make, how to market and distribute it, while holding those same leaders accountable for their segments’ financial remarks, will be implemented immediately, Iger said.