In this article, we will explore the reasons behind Disney’s decision to cut 7,000 jobs while rewarding shareholders and how this move could impact the company’s future.
Key Takeaways:
Disney to eliminate 7,000 jobs worldwide
Shareholders to receive dividends again
Cost-cutting initiative aims for $5.5 billion in savings
Job cuts part of larger strategy to streamline operations
Disney+ subscriber numbers drop but losses narrow
Disney recently revealed plans to cut 7,000 jobs from its global workforce as part of a multibillion-dollar cost-cutting initiative.
This move is aimed at streamlining operations amid ongoing challenges in the media industry.
CEO Bob Iger, who took over the company in November last year, showed gratitude towards the employees who were affected and recognized how these changes affected them on a personal level.
Simultaneously, Iger announced plans to reward shareholders by reinstating dividends by year’s end, which had been suspended during the pandemic.
This move is made possible by the cost-cutting initiatives, although the initial dividend will be modest with plans to build upon it over time.
Disney’s cost-cutting initiative aims to achieve $5.5 billion in savings, with $2.5 billion coming from annual savings in non-content operations.
The plan includes a 50% reduction in marketing expenses, 30% labor savings, and 20% savings from technology, procurement, and other expenses.
These cuts signal potential difficulties for other media and tech companies as Disney, a major advertiser, reduces its marketing expenditures by $1 billion.
Despite the announced job cuts, Disney reported better-than-expected financial results for Q4 2022.
Revenues rose by 8% to $23.5 billion, while earnings per share came in at 99 cents, excluding special items.
These results were buoyed by strong box office performances and robust theme park revenue.
Disney reported a slight drop in Disney+ streaming subscribers during the last quarter.
However, the company managed to reduce its losses from the previous quarter by cutting marketing expenses and adjusting pricing plans.
The company also saw a 2% increase in subscribers for its other streaming businesses, ESPN+ and Hulu.
Despite the recent drop in Disney+ subscribers, the company maintains that streaming remains its top priority and future focus.
Iger emphasized that while the streaming business isn’t as profitable as traditional linear content, Disney will keep traditional platforms as long as they benefit the company and its shareholders.
As part of Iger’s strategic plans, he announced the consolidation of Disney’s media and content businesses, including streaming, into a new segment called Disney Entertainment.
This restructuring aims to bring creativity back to the core of the company and empower creative leaders to take charge of their content’s financial performance.
Disney’s decision to cut 7,000 jobs while rewarding shareholders demonstrates the company’s dedication to streamlining operations and focusing on profitability.
As Disney continues to adapt to the ever-changing media landscape, it will be interesting to see how these changes impact its overall performance and market position.
