LOS ANGELES: Walt Disney Co on Wednesday announced a sweeping restructuring under recently reinstated CEO Bob Iger, cutting 7,000 jobs as part of an effort to save $5.5 billion in costs and make its streaming business profitable, Reuters reporetd.
The layoffs represent an estimated 3.6 per cent of Disney’s global workforce. Shares of Disney rose 4.7 per cent to $117.22 in after-hours trading.
The steps, including a promise to reinstate a dividend for shareholders, addressed some of the criticism from activist investor Nelson Peltz that the Mouse House was overspending on streaming.
“We are pleased that Disney is listening,” a spokesperson for Peltz’s Trian Group said in a statement late Wednesday.
Under a plan to cut costs and return power to creative executives, the company will restructure into three segments: an entertainment unit that encompasses film, television and streaming; a sports-focused ESPN unit; and Disney parks, experiences and products.
“This reorganization will result in a more cost-effective, coordinated approach to our operations,” Iger told analysts on a conference call. “We are committed to running efficiently, especially in a challenging environment.” Iger said streaming remained Disney’s top priority.
He said the company would “focus even more on our core brands and franchises” and “aggressively curate our general entertainment content.”
Iger also said he would ask the company’s board to restore the shareholder dividend by year end. Chief Financial Officer Christine McCarthy said the initial dividend would likely be a “small fraction” of the pre-COVID level with a plan to increase it over time.
Peltz, who is seeking a seat on the Disney board, had advocated for a restoration of the dividend by fiscal 2025.
“My sense is that Disney is already doing many of the things Nelson Peltz is demanding, though not necessarily in response to pressure from him,” said Paul Verna, principal analyst at Insider Intelligence.
Iger said the company was not in discussions to spin off ESPN, which will continue to be led by Jimmy Pitaro. TV executive Dana Walden and film chief Alan Bergman will lead the entertainment division.