Walt Disney Co. plans to lay off 7,000 employees starting this week citing strategic realignment. CEO Bob Iger wrote in an ominous mail made to staffers on Monday that they are planning to immediately shed around 7,000 employees as a part of the company’s extensive effort to rejuvenate their finances.
Iger signaled the rapid layoff in February, stating they were in utmost need to send back 7,000 employees as a part of the whopping $5.5 billion cost–cutting plan.
Of the total amount that Disney is aiming to save this year, $2.5 billion would be saved from operational cost reductions and the remaining can be kept within the company following the layoff of its employees.
The entertainment giant is currently busy preparing the pink slips that are yet to be sent to their 7,000 employees. The positions that are set to be eliminated in the cost-cutting process include individuals serving in the senior management levels to those in the positions of lower-level executives.
Employees serving in the units including the Disney Media and Entertainment Distribution, and Disney General Entertainment. On top of this, workers serving at corporate positions in theme parks, and those in the consumer product business are also targeted to be laid off.
The first set of cuts is expected to be sent towards the end of this week and the second round can be expected in April and it will shed thousands of employees altogether. However, the entire lay-off process is contemplated to be over by the beginning of the summer of 2023.
Disney took this decision after it faced major backlash from activist investors who claimed the company was engaging in a spending spree on its streaming business. So far, the streaming race has been an advantage for the production of new shows.
But the aforementioned cuts will now reduce the number of Disney’s’ content as well as how much Disney spends on its shows and movies.
In the memo, Iger called out to the employees who will remain in the company after the lay-off sessions to acknowledge the bumpy road ahead as he said “there will no doubt be challenges” moving forward. According to him, the company has been in an attempt to build the structures that will ultimately enable them to be successful.
To begin with, the memo addressed the issue as a coping method for creating a “more coordinated and effective approach” to their business, which the company believes to be crucial at the moment.
In addition to it, Iger invited the employees’ attention to what they believed was an employee’s true duty, to do what is required at “this tough time,” in order to ensure the entertainment magnate, Disney can continue to deliver “exceptional entertainment to the audiences across the globe.”
Disney cannot take this lightly, Iger said denoting the difficulty in asking his colleagues and friends to leave the firm.
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Currently, Disney has around 200,000 employees working under them at different levels in its various business interests, of which 166,000 were employed in America. So, a cut of 7,000 jobs refers to laying off 35 of Disney’s global workforce.
This is not the first time Iger is leading the company to a major restructuring. The employees have been molding themselves since he returned as the company’s CEO last November.
At the moment, Iger has also reorganized their business into three individual segments, each focused on different niches including one on the film, television, and streaming assets, one on the mass media company’s theme parks and experiences, and the other on ESPN.
He is also suggesting cut-off plans to come up with further general entertainment content, which includes shows and movies that fall outside the most popular brands such as “Pixar,” “Marvel,” and “Star Wars.”
Before these, Iger had made a string of moves after the return he made to Disney by taking over Bob Chapek.
One of them was deconstructing Disney Media and Entertainment Distribution, which was one of the key Disney units in the Chapek era, and the other one was the acquisition of Fox’s entertainment assets for a staggering $71 billion.
The latter was unanimously labeled as one of the worst moves made by Disney as it led the entertainment company to a significant debt burden.
Despite adopting these changes, the first fiscal quarter hasn’t been good for Disney as they lost nearly $1 billion. But Disney is still keeping its hopes high as its marquee streamer Disney+ is expected to yield profit by the end of fiscal 2024.
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