Disney to cut 7,000 jobs after fall in streaming subscribers
Disney has announced plans to cut 7,000 jobs and $5.5bn in costs after reporting its first ever drop in subscriber numbers.
The job cuts represent just over 3pc of Disney’s global workforce of around 220,000. The US media giant lost 2.4m Disney+ subscribers in the final three months of 2022, taking the total to 161.8m.
In December, Disney raised its US prices from $7.99 to $10.99 per month, while the new ad-funded tier remains $7.99. The company is expected to roll out similar changes in the UK this year.
Disney reported a further $1.1bn of losses in its streaming division, which also includes Hulu and ESPN+, though this was narrower than in the previous three months.
Chief executive Bob Iger, who returned to the role in November following the ousting of predecessor Bob Chapek, promised to rein in costs.
“We are embarking on a significant transformation, one that will maximise the potential of our world-class creative teams and our unparalleled brands and franchises,” he said.
“We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders.”
Disney has suffered a slump in its share price and is facing a high-profile proxy battle with activist investor Nelson Peltz, who has built up a $900m stake through his Trian Partners.
Mr Peltz has attacked Disney for its “over-the-top” executive pay as well as a run of recent acquisitions, in particular its blockbuster $71bn takeover of 21st Century Fox in 2019.
Disney has hit back at the activist, saying he does not understand the media giant’s business and lacks the skills required to help the board.
Rival Netflix also posted its first ever fall in subscriber numbers last year as consumers began to tighten their belts amid a deepening cost-of-living crisis.
Both Disney and Netflix have launched cheaper, ad-funded tiers of their streaming platforms in a bid to stem the decline.
Mr Iger has already outlined a number of changes since returning as chief executive, including scrapping Disney’s media and entertainment distribution unit.
The division, which centralised film and television sales and distribution, was the brainchild of Mr Chapek. It absolition reflects efforts to put more power back in the hands of creatives.
Mr Iger last month summoned staff back to the office, suggesting that the shift to home working was stifling creativity, and has frozen new hiring.
Despite the streaming drop, Disney’s overall revenue and profits beat forecasts thanks to the success of blockbusters Avatar: Way of Water and Black Panther: Wakanda Forever, as well as an increase in visits to its theme parks over the festive period.
Revenues stood at $23.5bn, while net profit reached $1.3bn.
Disney is reportedly looking at licensing out more of its films and TV series to rivals – a reversal of its previous strategy as it looks to find new sources of revenue.
The company is also thought to be giving greater priority to theatrical releases after years of pushing new films and TV shows directly to its streaming platforms.
Speculation has also been mounting that Disney could spin off its ESPN sports network – a move previously touted by activist Dan Loeb.