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The Walt Disney Company on Monday began 7,000 lay-offs announced earlier this year, as it seeks to control costs and create a more "streamlined" business, according to a letter sent to employees by chief executive Bob Iger and seen by Reuters.
Key points:
- Job cuts across several divisions of the Walt Disney Company will begin this week, after being announced in February
- The company is looking to control costs and turn a profit with its streaming service, Disney+
- The entertainment industry has begun to shrink since Netflix posted its first loss of subscribers in a decade early last year
Several major divisions of the company — Disney Entertainment, Disney Parks, Experiences and Products, and the company's corporate arm — will be impacted, according to a person familiar with the matter. Sports network ESPN is not touched by this week's round of cuts, but is anticipated to be included in later rounds.
The entertainment industry has undergone a period of cutbacks since its early enthusiastic embrace of video streaming, when established media companies lost billions as they launched competitors to Netflix.
They started to rein in spending when Netflix posted its first loss of subscribers in a decade in early 2022, and Wall Street began prioritising profitability over subscriber growth.
Mr Iger said Disney would begin notifying the first group of employees who are impacted by the workforce reductions over the next four days.
A second, larger round of job cuts will happen in April, "with several thousand more staff reductions", he said, while the final round will start before the beginning of the northern hemisphere summer.
Disney a 'dark, black box' as rumours swirl
California-based global entertainment conglomerate announced in February that it would eliminate 7,000 jobs as part of an effort to save $US5.5 billion ($8.2 billion) in costs and make its money-losing streaming business, Disney+, profitable.
"The difficult reality of many colleagues and friends leaving Disney is not something we take lightly," Mr Iger wrote, noting that many "bring a lifelong passion for Disney" to their work.
Details of the lay-offs had been closely guarded by the company, though insiders anticipated reductions would happen before Disney's annual shareholder meeting on April 3.
Anxiety has been building within the company as rumours swirled about areas of possible cuts.
"It's a dark, black box," said one Disney executive who spoke to Reuters last week.
Many had expected cuts to fall heavily on the Disney Media and Entertainment Division, which was eliminated in a corporate restructuring.
The unit has been without a leader since the exit of Kareem Daniel in November, shortly after Mr Iger returned as the company's chief executive.
"It's been a long time in the making," said SVB MoffettNathanson analyst Michael Nathanson, adding that the company first began to "whisper" about the need to cut costs last fall, when Bob Chapek was still Disney's chief executive.
Josh D'Amaro, chair of Disney Parks, Experiences and Products, sent a memo to theme parks employees in February warning that the profitable division would experience cuts.
Officials for two of the unions representing cast members at Walt Disney World Resorts in Orlando, Florida, said "guest-facing" services were not expected to be affected by the lay-offs.
"I don't see where, when there are labour 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.
Reuters