Disney will lay off 7,000 employees as part of a new restructuring

Turbulent times in the happiest place on earth. Disney has reported this Wednesday that it will cut 3.2% of its workforce, some 7,000 workers. The entertainment giant has informed shareholders this afternoon that the measure is part of a cost-cutting strategy and that it aims to achieve savings of about 5,500 million dollars. The company confirms that it has turned the wheel to depart from Bob Chapek’s management and that guidance is once again in the hands of Bob Iger, who came out of retirement in a surprise fashion to return to the role in November.

Iger shared the news of the cuts with his employees. This was minutes after he ended the call with investors, where it was reported that the benefits of the closing of 2022 grew 8% compared to the previous quarter. “We must ensure that the structure of the company and the size of our workforce align with our current needs and circumstances. Our success in the future depends on the decisions we make today,” Iger wrote. Until last October the company had some 220,000 employees worldwide.

One word kept flying over the call that the Disney leadership had with investors: restructuring. Iger assured that the company is undertaking a “significant transformation” that breaks with the vision of the previous CEO. Part of the savings that the company has set as a goal will come from the area of ​​content released on Disney+, whose growth commitment has caused a drain of 8,000 million dollars. The executive has announced that they will do an “aggressive curation” of the series and films that are in production and that are of general entertainment and international content. “Products have become very expensive in such a competitive world… We will also review the volume of what we are doing,” said Iger, who calculates that he can save about 3,000 million dollars by doing without audiovisual content.

Iger was responsible for directing the entertainment giant on the path of exploiting content based on the group’s intellectual property, produced by the Marvel, Pixar, Fox and Lucasfilm studios, whose acquisitions were closed by himself. With his return to the company, the executive intends to reduce the offer and “focus on core brands and franchises.” The company also intends to cut another $2.5 billion in operating expenses.

Iger’s new vision includes changing the growth strategy that Chapek had opted for to grow Disney+. This in the midst of what was called the streaming war, the dispute between entertainment giants to grow their subscriptions based on strengthening their catalogs. “I think the very aggressive efforts we made to get new subscribers globally was too aggressive and perhaps not so necessary,” Iger admitted on the call. The CEO said that the price increase that the streaming service had last year had no major repercussions and that subscriptions decreased only 1%.

Bob Iger has asked his employees for “patience” and “trust” as he carries out the new restructuring of the company. He asked the workers to remember the two transformations he carried out during his previous stage as CEO, which began in 2005. In the first one, he took the reins of creative control of the company with the purchase of the studios that have served the company to be spearhead. The second transformation came in 2016 when the foundations were laid for the company to jump into the digital world. His entry into this came three years later, in 2019, when the platform was launched, which today has 161 million subscribers.

It’s not clear that Iger has the time to make the changes he wants. Especially since there are already activist investors who have begun to put pressure on the leadership. The most important is Nelson Peltz, from the Trian investment fund. Last month he started a campaign in which he tries to convince shareholders to get on the board. His argument is that the company needs to think about a future time when Iger is no longer at the helm of Disney. The 71-year-old CEO will only be on the job for two years. In November it was said that his successor will be prepared during this period.