Disney may not be the happiest place on Earth for its workers. The entertainment giant has announced budget cuts and layoffs of about 7,000 employees, which amounts to about 3.6% of its employees worldwide.
Returning CEO Bob Iger declared a restructuring of the Walt Disney Company and drastic budget cuts of about $5.5 billion. The company will be divided into three chief departments: streaming and media services; a sports department for ESPN; and a parks department.
Alan Bergman and Dana Walden will both lead the streaming department. Both are vying for the CEO position that will be vacated by Iger in two years if all goes well. Sports operations for ESPN will remain the same, managed by Chairman Jimmy Pitaro. Disney parks will also retain existing management by Josh D’Amaro.
This enormous overhaul of the company was in response to the disappointing profit reports of last year, which also prompted the previous CEO’s dismissal and Iger’s reinstatement.
To compete with other online streaming services, Disney+ has been acquiring different companies like 21st Century Fox. Like its competitors Netflix, and Amazon’s Prime Video, Disney+ has enjoyed a surge of profit in its early days. However, just like other streaming sites, new competitors in the market have led to a decline in profit for Disney+.
This new restructuring’s goal is to help usher the company into a new era of success while stabilizing its financials. Another mission for the reorganization is to sustain the streaming service Disney+, despite the projected decrease in subscribers in the coming years.
“This reorganization will result in a more cost-effective, coordinated approach to our operations,” said Iger.
The company’s priority is still its streaming service which reaches a global audience. “Our company is fueled by storytelling and creativity, and virtually every dollar we earn, every transaction, every interaction with our consumers, emanates from something creative.”
Decision-making will be shifted back to the company’s creative teams. Iger said this change was brought about by looking back at the media giant’s history of great stories through films, cartoons, and other media.
“I have always believed that the best way to spur great creativity is to make sure the people who are managing the creative processes feel empowered.”
Aside from the recent reorganization news, investors were speculating about whether ESPN will be a spin-off company of Disney. Before Iger returned as CEO, there were talks of ESPN separating from the parent company. But Iger cleared the rumors, saying there will be no such thing as a spin-off for the sports arm of Disney.
“We’re not engaged in any conversations or considering a spinoff of ESPN.”
But with the reorganization commencing, Iger reassured the public that Pitaro would be more discerning on the expenses of the sport.
Comments on the job layoffs are currently pretty scarce because of how recent the news is. However, Disney also previously laid off more people during the pandemic when it faced financial stress with the closing of its parks.