Disney to cut 7,000 jobs as Bob Iger seeks $5.5 billion in savings
Baku, February 9, AZERTAC
Walt Disney Co. Chief Executive Officer Bob Iger announced plans for a dramatic restructuring of the world’s largest entertainment company, including 7,000 job cuts and $5.5 billion in cost savings, according to Bloomberg.
The reductions include plans to cut $3 billion from its budget for movies and TV shows and the rest in non-content related areas. About $1 billion of the savings are already underway, Iger said Wednesday on a conference call with investors.
As part of the change, Disney’s CEO also announced that the company will be reorganized into three divisions: an entertainment unit that includes its main TV, film and streaming businesses; the ESPN sports networks; and the theme-park unit, which includes cruise ships and consumer products.
The reorganization is intended to improve profit margins, Iger said, and represents his third major transformation of the business following efforts to beef up its film franchises through acquisitions and the development of its online business.
Iger, who returned to the lead the company in November after his successor Bob Chapek was fired, has been under pressure to improve results. Activist investor Nelson Peltz is seeking a board seat at the April 3 annual meeting, arguing in part that Disney shares have underperformed and the company needs better cost controls.
Shares of Disney rose in extended trading after the announcement and the company’s report of better-than-expected quarterly sales and profit, led by the theme-parks division.
On a conference call with analysts, Disney said it has no plans to spin off ESPN — a possibility that Iger said was studied but rejected in his absence. In entertainment, Disney will look at shrinking the cost of films and TV shows, which Iger said had become “extraordinarily expensive” in recent years due to competition.
Eventually, Iger said, Disney will offer the ESPN network as an a la carte option online, but there are no imminent plans to do.
He also said Disney’s zeal to grow streaming subscriptions at a time when Wall Street rewarded user growth more than profitability had led to unsustainable price promotions that the company won’t pursue as often. In recent months, investors have focused on more on the potential profitability of the media industry’s staggering investments in online film and TV shows.
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