The latest company to deal with costs cutting is Disney.
via: Deadline
The Walt Disney Company will be laying off thousands of employees as a part of a new round of cost cutting measures, CEO Bob Iger revealed today.
Speaking on the House of Mouse’s Q1 earning call this afternoon with CFO Christine McCarthy, Iger said that 7,000 jobs would be let go from the now 100-year-old company. “I have enormous respect and appreciate for the dedication of our employees worldwide,” Iger said, adding he did not make the cuts lightly.
Larger than anticipated, the layoffs will be across almost all of Disney’s empire.
However, with domestic employees hit the hardest, the cuts will be fairly light in the company’s thriving Parks and Resort division. No stranger to job losses over the past three years in various contexts, Disney has about 220,000 employees globally — which would see today’s cuts effect just over 3% of the company. Termed later as “efficiencies” by CFO McCarthy, a significant number of the “reductions” will come from the now-hollowed out DMED “marketing and headcount.”
Full of announced new structures and “significant transformations,” to quote Iger himself today, Wednesday’s strong-ish quarterly earnings are the first since the former long-serving CEO became the CEO again late last year.
Taking back the reigns with haste, Iger told a November 22, 2022 town hall that the hiring freeze his newly pink-slipped predecessor Bob Chapek put in place just weeks before to stem the financial bleeding. In a memo to Disney executives on November 11, Chapek had also said that job cuts were coming down the line — an endgame of sort that arrived today.
Intended in no small part to get a rise out of Wall Street and placate corporate skirmishes, this latest round of cuts also come a bit more than two months after 71-year old Iger suddenly returned as Disney CEO. Offering a recent history lesson and greatest hits at the top of the call before heading into the guts of the restructuring, $5.5 billion in savings, and Dana Walden and Aland Bergman’s boast to Disney Entertainment co-chairs, a soft-spoken Iger emphasized profitability and creativity as his North Stars.
For all the promise of a reset, the only major personnel move he had made since starting a second stint in the corner office was dismissing Kareem Daniel, who had been head of Disney Media and Entertainment Distribution. Iger had long disdained the centralized structure of DMED put in place by his hand-picked and short-lived successor Chapek, and has made it clear that dismantling it would be a cornerstone of his strategy.
Under attack from within and externally since he took over in early 2020, Chapek was finally shived and ousted in the night on November 20, 2022.
That was mere days after a near train wreck of an earnings call where the company reported a $1.5 billion quarterly loss on its streaming business, issuing weak guidance and raising doubts on Wall Street about prior forecasts for profitability in streaming by fall 2024.
Along with trying to fix the company’s financial issues, Iger is contending with a potentially messy proxy battle.
Nelson Peltz, an activist investor who took a small stake in the company, has demanded a seat on the board of directors. With backing from pal and ex-Marvel boss Ike Perlmutter, Peltz has complained that Disney’s stock has badly underperformed given its arsenal of intellectual property and its hefty investments in transactions like the $71.3 billion acquisition of most of 21st Century Fox. Spurned by both Chapek and Iger in his quest to sit at the big table, Peltz has gone on the public offensive in his increasingly long-shot but corrosive campaign.
The showdown will ultimately come at Disney’s annual shareholder meeting, the venue for a vote on board candidates. On the event horizon for today’s earnings and announcements, that meeting will be held virtually in early April.
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