Walt Disney Co begins 7,000 layoffs in effort to control costs
Walt Disney Co on Monday began 7,000 layoffs announced earlier this year as it seeks to control costs and create a “more streamlined” business, according to a letter seen by Reuters from CEO Bob Iger to employees.
The impact will affect several of the company’s main divisions — Disney Entertainment, Disney Parks, Experiences and Products and the company, according to a person familiar with the matter. This week’s round of cuts does not involve ESPN, but is expected to be included in later rounds.
The entertainment industry has seen a downturn since its early euphoric embrace of video streaming, which saw incumbent media companies lose billions launching rivals to Netflix Inc.
They began to rein in their spending as Netflix posted its first subscriber numbers in a decade in early 2022, and Wall Street began to prioritize profitability over subscriber growth.
Iger said Disney will begin notifying the first group of workers affected by the workforce reductions in the next four days. A second, larger round of job cuts will take place in April, “with several thousand redundancies.” The last round will start before the beginning of summer, the letter said.
The Burbank entertainment company announced in February that it would cut 7,000 jobs as part of an effort to save $5.5 billion in costs and turn its money-losing streaming business into a profitable one.
“We do not take lightly the difficult reality of many of Disney’s departing colleagues and friends,” Iger wrote, noting that many “bring to their work a lifelong passion for Disney.”
The company had been closely guarding the details of the layoffs, although insiders expected the reductions to take place before Disney’s annual general meeting on April 3.
Anxiety has been rising inside Disney as rumors swirl about possible cuts. “It’s a dark, black box,” said one Disney executive who spoke to Reuters last week.
Many had expected the cuts to fall heavily on the Disney Media and Entertainment division, which was eliminated as a result of the merger. The unit has been without a leader since the resignation of Kareem Daniel in November, shortly after Iger returned as the company’s CEO.
“It’s been in the works for a long time,” said SVB MoffettNathanson analyst Michael Nathanson, adding that the company first “whispered” about the need to cut costs last fall, when Bob Chapek was still Disney’s CEO.
Disney Parks, Experiences and Products Chairman Josh D’Amaro sent a memo to theme park workers in February warning that the profitable division was experiencing cuts.
Officials from the two unions representing Cast Members at Walt Disney World Resorts in Orlando, Fla., said the layoffs are not expected to affect “guest-facing” services.
“I don’t see where it would be a good decision to lay off workers where the Walt Disney Co. money train starts when there is a shortage of workers for front-line guest roles,” said Paul Cox, president of International. Local Union of Theater Workers 631.
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