The Walt Disney Company is to cut 7,000 jobs and make $5.5 billion in savings as part of a major restructure to trim costs and return power to creative executives.
Under the plan, the company will restructure into three segments: an entertainment unit that spans film, television and streaming; a sports-focused ESPN unit; and Disney parks, experiences and products.
In total, Disney will cut an estimated 3.6% of its global workforce.
In a statement, Chief Executive Bob Iger said Disney is embarking on a “significant transformation” that management believes will lead to improved profitability at the company’s streaming business.
The company, which owns Star Wars, Marvel and Pixar, will focus more on its core brands and franchises, Iger said.
Iger is under pressure to make Disney’s streaming business profitable and to bolster company’s share price, which has fallen more than 40% from early 2021 highs.
The CEO signalled that a restructure was ahead soon after replacing Bob Chapek in November. Iger fired Kareem Daniel, who led the now defunct Disney Media & Entertainment Distribution division and was a key Chapek ally.
Disney said it planned to cut $2.5 billion in sales and general administrative expenses and other operating costs, an effort that is already under way. Another $3 billion in savings would come from reductions in non-sports content, including the layoffs.
The cuts were announced by Iger after the company released better than expected financial results for the fourth quarter of 2022. Disney revenue in the quarter rose 8% to $23.5 billion, edging past estimates of $23.4 billion from analysts.
Disney+ ended the quarter with 161.8 million subscribers, down 1% from since Oct. 1. Hulu and ESPN+ each posted a 2% increase in paid subscribers during the quarter.