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Disney has announced a sweeping corporate restructuring that will result in 7,000 people losing their jobs as part of an effort to achieve US$5.5bn (£4.5bn, A$7.9bn) in cost savings, at the same time as revealing plans for sequels to Toy Story and Frozen.
The layoffs represent an estimated 3.6% of Disney’s global workforce and come after major job cuts at other US giants including Alphabet, Amazon, Ford and Meta.
The chief executive, Bob Iger, outlined the cost-cutting plan to investors during the company’s fiscal first-quarter earnings call, in which Disney net income came in at $1.28bn, below analyst estimates of $1.43bn.
On the same call, Iger also teased future sequels for Toy Story, Frozen and Zootopia, telling investors the upcoming films showed how “we are leaning into our unrivaled brands” and stressed the importance of franchises.
No further detail was given on the new films. There have been four Toy Story films since 1995, and a spin-off, Lightyear, which was mildly received by both audiences and critics. Frozen and Frozen II have each earned more than $1bn at the box office, as did Zootopia in 2016, with a sequel expected ever since.
Disney, which is under pressure to turn a profit from its global streaming business, said it would reorganize into three segments: an entertainment unit that encompasses film, television and streaming; a sports-focused ESPN unit; and Disney parks, experiences and products.
The restructuring would streamline operations, making its business more efficient, and reduce costs, the company said.
Disney is the latest media giant to announce job cuts in response to slowing subscriber growth and increased competition for streaming viewers. Disney+ earlier reported its first quarterly decrease in subscriptions for its Disney+ streaming service, which lost more than $1bn.
Warner Bros Discovery and Netflix previously underwent layoffs.
“The streaming business, which I believe is the future and has been growing, is not delivering the kind of profitability or bottom-line results that the linear business delivered for us over all over a few decades,” Iger said on Wednesday. “And so we’re in a very interesting transition period, but one, I think, is inevitably heading towards streaming.”
He told investors that Disney+’s subscriber losses could be attributed to the fact that “we were as a company in a global arms race for subscribers”.
“In our zeal to go after subscribers, I think we might have gotten a bit too aggressive in terms of our promotion,” he said, saying that charging consumers more had only had a minimal impact on subscription numbers, meaning that its previous “fairly aggressive” strategy “wasn’t absolutely necessary”.
The last time Disney made cuts was during the height of the pandemic, when it announced in November 2020 that it would lay off 32,000 workers, primarily at its theme parks.
Disney said it planned to cut $2.5bn in sales and general administrative expenses and other operating costs, an effort that is already under way. A further $3bn in savings would come from reductions in non-sports content, including the layoffs.
The reorganization marks a new chapter in the leadership of Iger, whose first tenure as chief executive began in 2005. He went on to fortify Disney with a roster of powerful entertainment brands, acquiring Pixar, Marvel and Lucasfilm. A decade later, he repositioned the company to capitalize on the streaming revolution, acquiring 21st Century Fox’s film and television assets in 2019 and launching Disney+ that fall.
Iger stepped down as chief executive in 2020 but returned to the role in November 2022.
Reuters contributed to this report
English (US)