Disney is planning to lay off 7,000 workers to cut costs across the company. CEO Bob Iger announced the news in an earnings call on Wednesday, stating that the move is “necessary to address the challenges we’re facing today.”
Like many other companies across the country, Disney’s making the changes as part of its efforts to reduce costs in a “challenging economic environment.” Iger says he’s “targeting $5.5 billion of cost savings across the company” and that the layoffs will “help achieve this.” Iger didn’t say which departments the layoffs will affect.
Rumors about layoffs began emerging shortly after Iger took over for outgoing Disney CEO Bob Chapek last November. Iger initially stepped down from the role in 2020, and his takeover has already led to major organizational changes for the company. Iger’s also establishing three core divisions at the company: Disney entertainment, ESPN, and Disney Parks experiences and products.
Iger still has his sights set on streaming despite a slowdown in subscriber growth. Disney Plus added just 200,000 subscribers in the US and Canada for a total of 46.6 million, while its international offering (excluding HotStar) saw the addition of 1.2 million members. Hulu and ESPN Plus had similarly slow growth, with each adding 800,000 and 600,000, respectively.
Disney’s direct-to-consumer division, which includes its streaming services, saw a 13 percent increase in revenue to $5.3 billion. But it still had an operating loss of around $1.1 billion, which the company attributed to higher costs at Disney Plus and Hulu. The company’s streaming business lost around $1.5 billion last quarter.
“Our priority is the enduring growth and profitability of our streaming business,” Iger says. “Our current forecasts indicate Disney Plus will hit profitability by the end of fiscal 2024, and achieving that remains our goal.”
Since the results span the last three months of 2022, it’s still too early to tell how much of an effect the $7.99 per month ad-supported tier will have on Disney Plus’ subscriber numbers. This is something Disney chief financial officer Christine McCarthy reflected on during the call, noting the company doesn’t “expect the launch of the Disney Plus ad tier to provide a meaningful financial impact until later this fiscal year.”
It’s possible that more people are dropping the service now that the three-year bundle it rolled out with the launch of Disney Plus is starting to expire. While Disney does offer a bundled plan with Disney Plus, Hulu, and ESPN Plus, it’s still more expensive than the original offer and reflects last year’s price hikes.