Disney to axe 7,000 jobs in $5.5bn cost-cutting plan

Disney chief executive Bob Iger announced plans to cut the company’s workforce by 7,000, or about 3 per cent, as part of a broad restructuring that he said would save $5.5bn over the next few years, revive its creative output and make its streaming business profitable.

Investors have been waiting to hear Iger’s strategic plan to reinvigorate the company since his surprise reappointment in November. In a statement, he said Disney was “embarking on a significant transformation” that would lead to “sustained growth and profitability” in streaming.

Disney shares jumped 9 per cent in after-hours trading following the announcement.

Iger’s predecessor, Bob Chapek, was dismissed by the board late last year after Disney’s streaming business posted a $1.5bn quarterly loss. The company pledged to reduce the loss by $200mn in the most recent quarter, but exceeded that target by cutting losses by about $400mn to $1.1bn, according to an earnings report on Wednesday.

Disney’s revenue rose 8 per cent to $23.5bn in the quarter and net income rose 11 per cent to $1.3bn. Its earnings of 99 cents per share were well ahead of Wall Street expectations of 78 cents, but down from $1.06 a year earlier.

Disney Plus, its flagship streaming service, shed about 2.4mn subscribers in the quarter, due largely to its loss of Indian Premier League cricket. Iger, like his peers at traditional media groups, is looking to emphasise profitability as the main streaming metric instead of subscriber growth. But its overall number of streaming subscribers — which also includes sites ESPN Plus and Hulu, along with Disney Plus — was roughly flat with the previous quarter at 235mn.

Iger is under pressure from activist investor Nelson Peltz, who is seeking a seat on Disney’s board. Disney has asked shareholders to reject Peltz’s push when its shareholders hold their annual meeting on April 3.

Peltz has criticised Disney for eliminating its dividend, a step it took during the coronavirus pandemic. But Iger told investors on Wednesday that he would ask the board to consider restarting the dividend by the end of this year.