Disney to cut costs by $5.5 billion and lay off 7,000 employees
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Wednesday, February 8, Walt Disney announced on large-scale restructuring and plans to cut costs by $5.5 billion. To reduce costs, the company, in particular, is going to cut 7 thousand employees – about 3% of its entire staff. As part of the restructuring, Disney will be divided into three parts: entertainment, which will include most of the film production, streaming, etc.; amusement parks; ESPN, which will include sports streaming service ESPN+ and some TV assets.
Disney announced the restructuring and cuts when it published its financials for the first quarter of its fiscal 2023 ended in December. The company’s revenue grew by 8%, to $23.5 billion, net income – by 11%, to $1.3 billion. This figure was worse than expected, but even more negative was the first-ever decline in the number of subscribers of the Disney + streaming service – by 2 .4 million. The development of the streaming service has been one of the main directions of the company in recent years, so investors are closely monitoring the number of its subscribers. Previously, some shareholders criticized Disney management for excessive spending on the service, now such costs will also be partially reduced.
That Disney is going to cut costs and cut staff, reported back in November last year. In the same month the corporation again headed Robert Iger, who served as its CEO for 15 years, retired a year earlier but has now returned “with a mandate from the board of directors to set the strategic direction to restart the company’s growth.”
After the announcement of the restructuring plan, Disney shares rose 5%.
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