Imminent Layoffs Across Disney Brands
In the first quarter of 2023, Disney+ had a loss of 2.4 million worldwide subscribers and an overall operating loss of nearly $1.1 billion attributed to increases in spending on Disney+ and Hulu.
In response to the downturn, on Monday 27th of March, Disney CEO Bob Iger announced that layoffs would begin during the course of this coming week. This would apparently be the first of three waves of reductions, following his February announcement that the company would eliminate a significant number of positions during the year.
The move aims to simplify the company’s operations during the ongoing instability in the media sector, and it’s estimated that the company will lay off about 7,000 workers, saving it around $5.5 billion.
As soon as Bob Iger took over as CEO of Disney in November, rumors of layoffs began to spread quickly. However, the first official announcement didn’t come until shortly after the company’s last quarterly earnings report in February 2023.
Iger revealed the timing of the layoffs in a note to staff, a copy of which was obtained this week by CNN. The first phase will start this week, and managers will soon start getting in touch with staff who will be affected.A second, more significant round of layoffs will take place around April, with several thousand people let go. Igor said that there will be a third round of layoffs before the summer, which will help the company reach its goal of cutting 7,000 jobs.
Major Restructuring to Satisfy Activist Investor Ends Proxy Fight
Back in February following its quarterly earnings release, Disney at the time suggested it would be restructuring its operations – in conjunction with the layoffs – to eventually be made up of three major divisions. These divisions were to be Disney Entertainment, which includes most of its streaming and media operations, ESPN, which runs the cable channel and the streaming service ESPN+, and the Parks, Experiences, and Products division.
The announcement came as the company was still engaged in a proxy fight with activist investor Nelson Peltz and his firm Trian Management, but since then, the drama has all but evaporated. Peltz in the past criticized Disney’s acquisition of Fox back in 2019 among other managerial and strategic matters. He had been unhappy with the governance of the company over the years, which he attributed to a loss of shareholder wealth.
With a major fight no longer being waged, Disney indicated in a statement that it was grateful to be able to refocus the direction of the company and that the board had nothing but faith in their new CEO and his vision for the future of Disney.
Next-gen Project First on the Chopping Block
According to The Wall Street Journal, Disney’s next-generation storytelling and consumer experiences division, which was looking into the possibility of Disney entering the so-called metaverse for around the last year, has been one of the first initiatives to be let go.
The new division was established a few months after Facebook renamed to Meta in an effort to align with the cutting-edge technology into which CEO Mark Zuckerberg had invested heavily and has since also shown underwhelming results.
The group, estimated to have consisted of about 50 employees, was tasked with investigating what the company’s former CEO suggested was the future of storytelling for Disney, using the company’s existing library of intellectual property. According to the report, the team was laid off in the first of three planned waves of layoffs at the company.
The Latest in a Long Line of Major Company Dismissals
Major companies that over-hired during the pandemic have been shedding workers in droves in the past twelve months, and Disney is no exception. Since the beginning of this year, more than 150,000 employees have lost their jobs in the tech industry alone, whether big or small, most of which are in the US.
In January, Salesforce made public an announcement that it would be terminating the jobs of around 8,000 of its workforce of approximately 80,000 employees. Since then, it has started letting go of staff in small groups rather than all at once.
Amazon also announced in January that it would be axing 18,000 workers, and just this week disclosed that it will be laying off another 9,000 In an effort to save expenses as It considers the state of the economy and global uncertainty.
In November, Meta fired 11,000 employees and recently announced plans to terminate the employment of a further 10,000 workers over the course of the next two months. The company also suggested it will stop recruiting for 5,000 vacant positions and cancel other low-priority initiatives.
Late last year, Disney had around 220,000 employees, with about 166,000 located in the United States, so the 7,000 planned layoffs are around 3% of the company’s worldwide workforce.
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