Disney sacking 7,000 workers amid plan to slash $5.5 billion in costs

Disney is axing 7,000 employees, over 3% of the company’s global workforce of 220,000 workers, CEO Bob Iger announced on a first-quarter earnings call.

The layoffs are part of a planned $5.5 billion reduction in costs for the entertainment giant, $2.5 billion of which is coming from noncontent parts of Disney’s operations.

Disney Chief Financial Officer Christine McCarthy explained on the call that half of $2.5 billion in savings will come from reductions to marketing, 30% from layoffs and the remainder from lowering technology and procurement expenses.

“To help achieve this, we will be reducing our workforce by approximately 7,000 jobs,” Mr. Iger explained on the call, transcribed by Seeking Alpha. “While this is necessary to address the challenges we are facing today, I do not make this decision lightly. I have enormous respect and appreciation for the talent and dedication of our employees worldwide and I am mindful of the personal impact of these changes.”

Most of the savings Disney will recoup in 2023 come from a reduction in the marketing budget and headcount at Disney Media & Entertainment Distribution. DMED has closed down, per the earnings call. 

“We must also return creativity to the center of the company. … Therefore, our new structure is aimed at returning greater authority to our creative leaders and making them accountable for how their content performs financially. Our former structure severed that link and it must be restored,” Mr. Iger said.

Disney will now have three main divisions: Disney Entertainment, which will handle the creation and distribution of content on all platforms; Disney Parks, Experiences and Products; and ESPN.

The remaining $3 billion in planned savings will be recouped from changes to nonsports content.

“We are going to take a really hard look at the cost for everything that we make, both across television and film. … In addition, we’re going to look at the volume of what we make. And with that in mind, we’re going to be fairly aggressive at better curation when it comes to general entertainment,” Mr. Iger explained, juxtaposing general entertainment with core Disney franchises.