Bob Iger’s plan to attack streaming-boom era spending at Walt Disney will pick up steam this week as the company begins the process of cutting about 7,000 jobs.
In a memo to staff on Monday, Iger said the cuts will start this week and last until the early summer, with the bulk taking place in April. Iger told staff the measures are needed for Disney to adopt “a more effective, co-ordinated and streamlined approach to our business”.
The cuts are expected to be spread across the company, though hourly workers at its theme parks are not expected to be affected. They are the first big reductions at Disney since 2019, when the company cut thousands of jobs after completing its acquisition of 21st Century Fox.
Disney’s moves come amid a wider retrenchment among the traditional Hollywood studios, which are seeking to stem billions in losses on streaming content. Disney plans to turn a profit in streaming next year, and along with rivals such as Warner Bros, it is again emphasising the importance of box office revenue, which was often sacrificed to build out digital operations.
After Iger’s surprise return as Disney chief executive in November, he outlined a plan to restructure the group and slash costs, which had skyrocketed as the company sought to expand the Disney Plus streaming service. Iger has said he plans to slash $3bn from content budgets and $2.5bn in other costs.
Iger told an investor conference this month that he is optimistic about Disney’s streaming business, but he needed to “better rationalise” costs. Disney recorded a $1.5bn quarterly loss in streaming last autumn, a central factor in the dismissal of former chief executive Bob Chapek.
He added in his remarks at the conference that Disney will have to become “more disciplined about how much we spend on almost everything”, noting that spending on TV series and movies had “just skyrocketed in a huge way and not a supportable way”.
Cutting content spending could take longer, he said, since Disney has “full commitments” this year and into 2024. But executives on the content side of the business support the cuts, he added, and they “will deliver” the spending reductions.
In addition to the cost cuts, Iger is weighing his options on the fate of the Hulu streaming service. Disney owns two-thirds of the business, with rival Comcast holding the remainder. The companies in 2019 agreed that either side could force a transaction starting in January of 2024.
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