Disney CEO Bob Iger has announced that the company will be cutting 7,000 jobs this year as part of its effort to slash $5.5 billion in costs. In an internal memo obtained by Yahoo Finance, Iger said that the company will begin notifying affected employees this week and that a second, larger round of notifications will happen in April.
The layoffs come as Disney disclosed plans to restructure the organization into three core business segments: Disney Entertainment, ESPN, and Disney Parks, Experiences and Products. Alan Bergman and Dana Walden will be co-chairs of Disney Entertainment, Jimmy Pitaro will continue to serve as chairman of ESPN, and Josh D'Amaro will continue to be chairman of Disney Parks, Experiences and Products.
While the news is certainly difficult for those who will be impacted by the layoffs, Iger stressed that the decision was not taken lightly. He also warned that there will be challenges ahead for those who remain at the company.
For our employees who aren't impacted, I want to acknowledge that there will no doubt be challenges ahead as we continue building the structures and functions that will enable us to be successful moving forward. I ask for your continued understanding and collaboration during this time.
Despite the layoffs, Disney's stock was little changed on the heels of the news. Shares are up about 10% since the start of the year.
In his prepared remarks during the company's first quarter earnings report on Feb. 8, Iger said the new strategic organization "will result in a more cost-effective coordinated and streamlined approach to our operations, and we are committed to running our businesses more efficiently, especially in a challenging economic environment."
This article will explore the reasons behind Disney's decision to cut jobs, the impact it will have on the company and its employees, and what the future holds for the entertainment giant.
Why is Disney Cutting Jobs?
The COVID-19 pandemic has had a profound impact on the entertainment industry, and Disney has not been immune. The closure of its parks, resorts, and cruise lines has led to a significant decline in revenue. At the same time, the company has continued to invest heavily in its streaming service, Disney+, which has racked up more than 100 million subscribers since its launch in November 2019.
While Disney+ has been a bright spot for the company, it has also been a drain on its finances. In its latest quarter, the company's streaming division narrowed its losses to $1.1 billion from $1.5 billion, but it still has a long way to go before it turns a profit. The decision to cut jobs is part of Disney's effort to rein in its spending and become more efficient.
What Impact Will the Layoffs Have?
The layoffs will undoubtedly have a significant impact on the employees who are let go, as well as those who remain at the company. Losing one's job is never easy, and it can be particularly challenging in the current economic environment. However, the impact on Disney itself may be less severe.
The company has already indicated that the layoffs will result in cost savings of $5.5 billion. This, combined with the restructuring of the organization into three core business segments, should enable Disney to operate more efficiently and effectively in the long run. By streamlining its operations and focusing on its core businesses, Disney may be better positioned to weather the current economic storm.
What Does the Future Hold for Disney?
Despite the challenges it faces, Disney remains one of the most iconic and successful entertainment companies in the world. Its parks, resorts, and cruise lines are beloved by millions of people around the globe, and its content is some of the most popular in the industry.
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