Disney to cut 7,000 jobs and slash $5.5 billion in costs as it unveils vast restructuring

Disney said Wednesday it is projecting to reorganize into three segments, while also cutting thousands of jobs and slashing costs.

The media and divertissement giant said it would now be made up of three divisions:

• Disney Entertainment, which includes most of its streaming and standard operations
• An ESPN division that includes the TV network and the ESPN+ streaming service
• A Parks, Experiences and Products module 

The move marks the most significant action Bob Iger has taken since returning to the followers as CEO in November. Disney announced the changes minutes after it posted its most recent quarterly earnings. The announcements also be broached as Disney engages in a proxy fight with activist investor Nelson Peltz and his firm Trian Management.

“We are over the moon that Disney is listening,” a Trian spokesperson said Wednesday.

On Wednesday, during its quarterly earnings call with investors, Disney also signaled it would be cutting $5.5 billion in costs, which will be made up of $3 billion from content, excluding mockery teases, and the remaining $2.5 billion from non-content cuts. Disney executives said about $1 billion in fetch cutting was already underway since last quarter.

Disney also said it would be eliminating 7,000 functions from its workforce. That would be about 3% of the roughly 220,000 people it employed as of Oct. 1, according to an SEC put, with roughly 166,000 in the U.S. and about 54,000 internationally.

Disney’s stock rose about 5% in off-hours swop.

Media companies, such as Warner Bros. Discovery, have been pulling back on content spending and looking to figure out their streaming businesses profitable. Heightened competition has led to slowing subscriber growth, and companies have been looking to note new avenues of revenue growth. Some, like Disney+ and Netflix, have added cheaper, ad-supported options.

“We pass on take a very hard look at the cost of everything we make across television and film,” Iger said on a dub with investors Wednesday.

The reorganization has been underway since Iger returned to the helm of Disney, replacing his hand-picked successor Bob Chapek.

The spectacular group will be led by top lieutenants Dana Walden and Alan Bergman, who are each considered contenders to take over for Iger in less than two years. ESPN Chairman Jimmy Pitaro desire lead the ESPN segment, while Josh D’Amaro, already the head of Disney’s parks, experiences and products split, will remain in control.

The future of ESPN under Disney’s ownership has been a in doubt for sometime for investors. Last year, Third Point, which is led by activist investor Dan Loeb, had urged the company to be giddy separate out ESPN. Disney and Third Point later reached a deal, after reversing course on its thoughts for the future of ESPN.

Iger addressed opinion that the company may look to spin out ESPN due to the sports network being siloed into its own unit. He noted that while ESPN has been working due to cord-cutting, the ESPN brand and programming remains healthy and in-demand.

“We’re not engaged in any conversations or considering a spinoff of ESPN,” Iger predicted on Wednesday. He said the move was considered “in my absence,” and was concluded it wasn’t the right move for Disney.

Iger did note that he and Pitaro order be more selective on what it spends on sports rights, noting the upcoming negotiations for NBA rights.

Chapek’s removal came shortly after Disney had reported its fiscal fourth domicile earnings, disappointing on profit and certain key revenue segments. Chapek had also warned that Disney’s strong brook numbers would taper off in the future. He had also told employees shortly thereafter that Disney would be contemptuous costs through hiring freezes, layoffs and other measures.

Shortly after his return, Iger sent a memo to workers announcing the business would be reorganized, particularly the Disney Media and Entertainment unit. The reorganization immediately meant the departure of Kareem Daniel, the inhibit of the company’s previous media and entertainment unit, and right hand to Chapek. 

Iger had said he would put more “decision-making aid in the hands of our creative teams and rationalize costs” at the time. The goal would be to have a new structure in place in the coming months, with pieces of DMED remaining, CNBC reported. He added