According to a statement issued by CEO Bob Iger to staff and reviewed by Reuters, the Walt Disney Co (DIS.N) started the 7,000 layoffs announced earlier this year on Monday in an effort to minimize expenses and build a more “streamlined” organization.
According to a source familiar with the situation, this will have an effect on several key areas of the business, including Disney Entertainment, Disney Parks, Experiences and Products, and corporate. ESPN survives the current round of cuts unscathed and will likely survive subsequent rounds as well.
Since the entertainment industry’s initial enthusiastic adoption of video streaming, when major media giants wasted billions while launching competitors to Netflix Inc., there has been a retreat.
The media industry began cutting back on investment after Netflix reported its first drop in subscribers in a decade in early 2022 and investors began putting more emphasis on profits than on audience growth.
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Over the course of the next four days, Iger said, Disney will begin notifying the first group of employees who will be affected by the staff cutbacks. In April, “several thousand more staff reductions” are scheduled to take place. The message promised that the last phase would begin before summer officially began.
In February, the Burbank entertainment giant stated it would cut 7,000 workers in an effort to save $5.5 billion in expenditures and turn its money-losing streaming business into a successful one.
“The difficult reality of many colleagues and friends leaving Disney is not something we take lightly,” Iger wrote, noting that many “bring a lifelong passion for Disney” to their work.
A source stated that the television production and acquisition divisions were among the first to be reduced, leading to the departure of senior executives.
Insiders believed layoffs would occur before Disney’s annual shareholder meeting on April 3, but the business had remained tight-lipped about the specifics. At Disney, tension has been rising as whispers of potential budget cuts have circulated.
According to Reuters, one Disney official described it as “a dark, black box” last week.
The Disney Media and Entertainment Division was disbanded as part of a corporate restructuring, as many predicted it would. With Kareem Daniel’s departure in November, shortly after Iger’s return as CEO, the division has lacked a leader.
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SVB MoffettNathanson analyst Michael Nathanson stated, “It’s been a long time in the making,” and added that Disney first “to whisper” about the need to slash expenditures last fall, when Bob Chapek was still Disney’s top executive.
On March 28th, USA TODAY confirmed the news with a tweet from its official account. The complete tweet is included here for your perusal-
The Walt Disney Co. will reportedly begin notifying employees impacted by layoffs this week.
The company said in February that it would cut around 7,000 jobs as part of a broader transformation for the company.https://t.co/njNegJBkm8
— USA TODAY (@USATODAY) March 28, 2023
Disney Parks, Experiences, and Products Chair Josh D’Amaro notified theme park staff of impending layoffs in February.
There will be no impact on “guest-facing” services, according to representatives from two unions that represent cast members at Walt Disney World Resorts in Orlando, Florida.
“I don’t see where, when there are labor shortages in front-facing guest roles, it would be a good decision to lay off workers where the money train starts for the Walt Disney Co,” said Paul Cox, president of the International Alliance of Theatrical Stage Employees Local 631.
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