Layoffs. They’re not just plaguing Big Tech anymore. Disney plans to lay off 7,000 workers and restructure its organization as it looks to boost profits and cut costs by US$5.5 billion.
Driving the news: CEO Bob Iger will disband the Disney Media and Entertainment Distribution division–accounting for most of the layoffs–and replace it with a new Disney Entertainment division focusing on everything related to movies, TV, and Disney+.
- Iger also promises to cut content spending by focusing on core franchises, explore ways to bring in cash (like licensing deals and hiking Disney+ prices) and hold creative leaders more accountable for the financial performance of content.
Catch-up: For those who grew up pretending to be Buzz Lightyears and Little Mermaids, Disney might feel like an unstoppable juggernaut with unmatched cultural influence, but things have been uneasy since Iger came out of retirement to save the company.
- Disney+ continues to bleed money (losing ~US$10 billion since its launch in 2019) and the company is involved in an ongoing political battle with the state of Florida.
- Disney also narrowly avoided a proxy war. Activist investor Nelson Peltz was critical of Iger and sought to get a board seat, but is now pleased with the new direction.
Bottom line: In the face of immense pressure to make Disney more profitable across entertainment, parks, and ESPN, Iger said, “It’s time for another transformation.” Cost cutting and organizational restructuring are the first steps in the House of Mouse’s next stage.
Zoom out: Disney is far from the only entertainment company going through an existential crisis, with rivals like Netflix and Warner Bros. Discovery also looking for ways to thrive (or simply survive) in a media landscape where movies have lost their cultural cache and streaming only gets more crowded.