Effective immediately, The Walt Disney Company will try its hand at slashing more than $5 billion in costs.
On Wednesday, CEO Bob Iger hosted the company’s earnings call for the fiscal first quarter, which began on October 1, 2022, and ended on January 1, 2023. It was also the first earnings call hosted by the veteran Disney CEO since he was reinstalled to the post on November 20, 2022, replacing a disgraced Bob Chapek.
The media and entertainment giant showed noticeable improvements across several categories during the company’s fiscal first quarter, especially when compared to the previous quarter’s dismal returns, news of which was released just days before Disney’s announcement of Bob Chapek’s removal. Disney’s revenue grew to $23.5 billion, an increase of 8% over the previous year. And the Company’s earnings per share increased to $0.99.
Both Disney’s revenue and profit line blew away Wall Street analysts’ projections.
But despite the shattered projections, the increases, and the growth, Disney CEO Bob Iger says the company is embarking on a big change within the company–one that the veteran CEO clearly believes is necessary to continue the repairs needed at Disney following Chapek’s various missteps over the years.
“After a solid first quarter, we are embarking on a significant transformation,” Iger said in Disney’s earnings release, “one that will maximize the potential of our world-class creative teams and our unparalleled brands and franchises. 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.”
As part of that “significant transformation,” Iger said the company will lay off nearly 7,000 employees, or about 4% of its global workforce, in an effort to bolster growth and trim expenses. He further said that the changes were going into effect immediately.
Of the $5.5 billion in cost-cutting, a reported $3 billion will be in non-sports-related content, and $2.5 billion will be in general operating costs within The Walt Disney Company. Iger added that the first $1 billion in cost-cutting is already underway. Disney CFO Christine McCarthy gave more details, saying that non-content costs in the company are 50% marketing, 30% labor, and 20% technology, procurement, and other expenses.