The Walt Disney Company on Wednesday announced a sweeping restructuring under recently reinstated boss Bob Iger, cutting 7,000 jobs as part of an effort to save $5.5 billion US ($7.39 billion Cdn) in costs and make its streaming business profitable.
The layoffs represent an estimated 3.6 per cent of Disney's global workforce.
Shares of Disney rose eight per cent to $120.77 in after-hours trading.
Iger said he would reorganize the company 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, co-ordinated approach to our operations," Iger told analysts on a conference call. "We are committed to running efficiently, especially in a challenging environment."
Iger also said he would ask the company's board to restore the dividend for shareholders by the end of 2023.
The CEO, who came out of retirement in November to run Disney for two more years, is under pressure to improve financial returns. Activist investor Nelson Peltz is fighting to join Disney's board, arguing the company has overspent on streaming and fumbled succession planning.
Disney is the latest media company to announce job cuts in response to slowing subscriber growth and increased competition for streaming viewers. Warner Bros. Discovery and Netflix previously underwent layoffs.
Disney earlier reported its first quarterly decrease in subscriptions for its Disney+ streaming media unit which lost more than $1 billion.
Third restructure in five years
This marks Disney's third restructuring in five years. It reorganized its business in 2018 to accelerate the growth of its streaming business, and again in 2020, to further spur streaming's growth.
In November 2020, Disney announced that it would lay off 32,000 workers, primarily at its theme parks. The cuts took place in the first half of fiscal 2021.
On Wednesday, Disney said it planned to cut $2.5 billion in sales and general administrative expenses and other operating costs, an effort that is already under way. Another $3 billion in savings would come from reductions in non-sports content, including the layoffs.
For the quarter that ended on Dec. 31, Disney reported adjusted earnings per share of 99 cents, ahead of the average analyst estimate of 78 cents, according to Refinitiv data. Net income came in at $1.279 billion, below analyst estimates of $1.429 billion. Revenue hit $23.512 billion, ahead of Wall Street estimates of $23.4 billion.
The reorganization marks a new chapter in the leadership of Iger, whose first tenure as CEO began in 2005. He went on to fortify Disney with a roster of powerful entertainment brands, acquiring Pixar Animation Studios, Marvel Entertainment and Lucasfilm.
A decade later, Iger repositioned the company to capitalize on the streaming revolution, acquiring 21st Century Fox's film and television assets in 2019 and launching the Disney+ streaming service that fall.
Iger stepped down as CEO in 2020 but returned to the role in November 2022.
Now, Iger will seek to put Disney's streaming business on a path to growth and profitability. The new structure also makes good on Iger's promise to restore decision-making to the company's creative leaders, who will determine what movies and series to make and how the content will be distributed and marketed.
