There might be only six dwarves next time you go to Disneyland..The Walt Disney Company said on Wednesday it is cutting 7,000 jobs, about 3.6% of Disney's global workforce as part of a sweeping restructuring in an effort to save US$5.5 billion in costs and make its streaming business profitable. .The cuts were announced by recently reinstated boss Bob Iger, who said “I have enormous respect and appreciation for the dedication of our employees worldwide.”.“While this is necessary to address the challenges we face today, I do not make this decision lightly.”.US-based employees will take the hardest hit, with the cuts expected to be light in the company’s thriving Parks and Resort division. No stranger to job losses over the past three years in various contexts, Disney has about 220,000 employees worldwide. .Iger said the House of Mouse will be reorganized into three segments: an entertainment unit that encompasses film, television and streaming; a sports-focused ESPN unit; and Disney parks, experiences and products.."This reorganization will result in a more cost-effective, coordinated approach to our operations," Iger told analysts on a conference call. "We are committed to running efficiently, especially in a challenging environment.".Shares of Disney rose 8% to US$120.77 in after-hours trading..Iger added he would ask the company's board to restore the dividend for shareholders by the end of 2023..The CEO, who came out of retirement in November to run Disney for two more years, is under pressure to improve financial returns. .Disney is the latest media company to announce job cuts in response to slowing subscriber growth and increased competition for streaming viewers. The company earlier reported its first quarterly decrease in subscriptions for its Disney+ streaming media unit which lost more than $1 billion..Warner Bros Discovery Inc. and Netflix Inc previously underwent layoffs..This is Disney’s third restructuring in five years, the most recent being in November 2020, during the height of the pandemic, when it announced it would lay off 32,000 workers, primarily at its theme parks. The cuts took place in the first half of fiscal 2021..Iger said plans include cuts to US$2.5 billion in sales and general administrative expenses and other operating costs, an effort that is already under way. Another US$3 billion in savings would come from reductions in non-sports content, including the layoffs..For the quarter that ended on Dec. 31, Disney reported adjusted earnings per share of 99 cents, ahead of the average analyst estimate of 78 cents, according to Refinitiv data..For the quarter that ended on Dec. 31, Disney reported net income of US$1.279 billion, below analysts’ estimates of US$1.429 billion. Revenues, at US$23.512 billion, exceeded Wall Street estimates of US$23.4 billion..The reorganization marks a new chapter in the leadership of Iger, whose first tenure as CEO began in 2005. He went on to add a powerful roster of entertainment brands for Disney, acquiring Pixar Animation Studios, Marvel Entertainment and Lucasfilm. A decade later, Iger repositioned the company to capitalize on the streaming revolution, acquiring 21st Century Fox's film and television assets in 2019 and launching the Disney+ streaming service that fall..Iger stepped down as CEO in 2020 but was called back by Disney in November 2022..Now, Iger will focus on putting Disney's streaming business on a path to growth and profitability. The new structure also makes good on Iger's promise to restore decision-making to the company's creative leaders, who will determine what movies and series to make and how the content will be distributed and marketed..Along with trying to fix the company’s financial issues, Iger is contending with a potentially messy proxy battle..Nelson Peltz, an activist investor who took a small stake in the company, has demanded a seat on the board of directors. With backing from pal and ex-Marvel boss Ike Perlmutter, Peltz has complained that Disney’s stock has badly underperformed given its arsenal of intellectual property and its hefty investments in transactions such as the US$71.3 billion acquisition of most of 21st Century Fox. Peltz has gone on the public offensive in his increasingly long-shot but corrosive campaign, reports Deadline, an online entertainment news source. .A showdown will ultimately come at Disney’s annual shareholder meeting that will be held virtually in early April.
