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Disney plans 7,000 lay-offs, $3bn content savings, return to third-party licensing

Disney is set to cut around 7,000 jobs and is looking for US$3bn in non-sports content savings, returning CEO Bob Iger said, as it attempts to rationalise spending across the entire business.

Bob Iger

During a bombshell first-quarter earnings call, Iger also revealed Disney is restructuring under three separate divisions – the newly created Disney Entertainment division, a standalone ESPN unit and theme parks – in addition to planning a return to third-party licensing.

Iger, who officially re-took the top post at Disney in November after the ousting of Bob Chapek, said the company is embarking on a “significant transformation” that will set it on a path to sustained growth and profitability, while also better positioning it to weather future disruption, increased competition and global economic challenges.

In total, Disney plans to cut around US$5.5bn in spending. Within that, Disney chief financial officer Christine McCarthy said the company was targeting US$3bn in content savings outside of sports over the next few years.

To find those savings, Iger said Disney would “aggressively curate” its general entertainment content, which has become a focal point of its content investment in recent years as it has looked to bulk up its original offerings on Disney+.

Execs did not expand on specifically how it would reduce content spending, but Iger did say Disney would “reassess all markets we have launched [Disney+] in, and also determine the right balance between global and local content.” In a familiar refrain from media execs in 2023, Iger said Disney would “focus even more on our core brands and franchises” as it looks to right the ship.

In addition, Disney said it would pursue US$2.5bn in savings related to non-content expenses, including marketing spending and labour costs.

The elimination of 7,000 positions represents over 3% of Disney’s roughly 220,000-strong workforce.

The new division, Disney Entertainment, will be jointly led by co-chairmen Dana Walden and Alan Bergman, and house Disney’s entire portfolio of entertainment, media and content businesses globally, including its streaming business.

Iger said the new structure “is about returning greater authority to creative leaders and making them accountable for how their content performs financially.” The new structure replaces the Disney Media and Entertainment Distribution division established by Chapek, which Iger shuttered upon his return.

A return to third-party licensing is also part of the cost-savings plan, said Iger, although exactly how big a revenue generator it will be remains unclear. Since the launch of Disney+, Disney has typically shied away from licensing content and IP to third parties.

Iger added: “We have opportunities, using the great talent we have, to create [content] for third parties and we’re going to look at that very seriously. I actually think there’s a nice opportunity to create a growth business for the company, but it’s way too soon to predict what that can be.”

The announcements came as Disney reported its first-quarter financials, with the company reporting better-than-expected revenue, streaming losses of around US$1.1bn and mixed subscriber results.

On the subscriptions front, Disney+ lost around 2.4 million subscribers. However, the decline was attributable entirely to subscriber losses at its Disney+ Hotstar service in India.

In the US and Canada, Disney+ gained around 200,000 subscribers in the quarter to reach 46.6 million. In international markets outside of North America (excluding Disney+ Hotstar), subs rose by 1.1 million to 57.7 million. In total, Disney+ (excluding Hotstar) grew to 104.3 million subscribers by the end of the first quarter, up from 102.9 million.

Direct-to-consumer losses were US$1.1bn in the first quarter, down from around US$1.5bn the prior quarter. Disney said the losses were primarily attributable to Disney+. Iger reaffirmed Disney’s goal to make Disney+ profitable by the end of fiscal 2024.


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