Previously, in February, Disney CEO Bob Iger stated its plan to cut down up to 7000 employees in an earnings call with the company shareholders. He also revealed that the layoff will take 3 rounds to complete with the first one happening really soon within this week. Disney has been known for producing the most successful TV shows and movie franchises and owning several other businesses.
Disney recently announced that it will cut around 3% of its global workforce, roughly 6,500 jobs, which will save the company approximately $5.5 billion. In a statement, Disney’s CEO highlighted that the company is making tough decisions to ensure it can continue to deliver exceptional entertainment to audiences worldwide, even in tough times.
The pandemic has been particularly difficult for Disney, as it lost billions of dollars due to the closure of amusement parks and the halting of in-person productions of movies and TV shows. However, the reopening of parks in April 2021 has allowed Disney to recoup some of its losses, thanks in part to raising admission prices for Magic Kingdom, Epcot, and Hollywood Studios.
He shared “Leaders will be communicating the news directly to the first group of impacted employees over the next four days. A second, larger round of notifications will happen in April with several thousand more staff reductions, and we expect to commence the final round of notifications before the beginning of the summer to reach our 7,000-job target.” More specifically, “This week, we begin notifying employees whose positions are impacted by the company’s workforce reductions.”
The mass layoffs will affect many departments of the world’s biggest entertainment company. These include the media and distribution segment along with ESPN and the theme parks and resorts. The three will be the most impacted among its divisions. However, it does not mean that everyone is safe in the future. The CEO added “For our employees who aren’t impacted, I want to acknowledge that there will no doubt be challenges ahead as we continue building the structures and functions that will enable us to be successful moving forward. I ask for your continued understanding and collaboration during this time.” This means that whatever is waiting for them ahead is still unknown.
Reportedly, Disney might have lost about $1.1 billion in operation. This is mostly due to the increased subscription fees of Disney+ and Hulu. Disney’s streaming business is expected to make a profit not until late 2024, unlike its biggest competitor Netflix which is also profitable. Due to the high costs, Disney+ lost over 2.4 global subscribers.
Disney has started laying off employees, and the first round has focused primarily on television production and acquisitions, according to the Hollywood Reporter. After abruptly firing its former CEO Bob Chapek in November, Disney reinstalled Bob Iger, who aims to make Disney’s streaming platforms profitable. Reports suggest that the upcoming layoffs will impact a wide range of Disney’s businesses, from entry-level animators to senior executives, including Marvel Entertainment Chairman Isaac Perlmutter, who is not associated with Marvel Studios, which produces superhero blockbusters. The Wall Street Journal also reported that 50 employees in charge of expanding Disney into the metaverse will lose their jobs.
Despite these layoffs, Disney still aims to deliver outstanding entertainment to audiences worldwide. The company has been hit hard in the past few years, losing billions of dollars during the early days of the pandemic. However, the recent reopening of its parks has helped Disney recover some of its losses as it raised admission prices for its Magic Kingdom, Epcot, and Hollywood Studios. It is essential to make difficult decisions to ensure the company’s financial stability, but Disney remains committed to providing top-notch entertainment for its viewers.
Disney’s stock has been struggling over the past year, losing around 50% of its value since the summer of 2021. Although the stock surged after Iger’s return, it has been mostly stagnant in recent months. However, the reduction in staff may have a positive impact on the company’s stock, at least in the short term, as investors often view job cuts as a way for companies to improve their financials.
The company’s annual shareholding meeting is planned to take place on April 3, 2022. Then, there will be more details and updates about the layoffs and future plans. After the pandemic, mass layoffs do not only occur in tech companies such as Google, Meta, Twitter or Amazon but also in entertainment/media companies like Disney and Warner Bros. Last year, Warner Bros. Discovery also goes with the job reduction because the company is in debt (up to $53 billion). The job cuts also happen in Twitter, Amazon, Spotify, Bilibili, Paramount Global, CNN and BBC. The effect of the Covid-19 does not spare any major company.
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