Disney is cutting 7,000 jobs, slashing $3bn from content spend and overhauling its content operations, with a full-blown return to third-party sales in the works.
The restructuring comes just three months after the Mouse House reinstated Bob Iger as CEO, after he replaced the ousted Bob Chapek following a disastrous Q4 earnings call in which Disney revealed its DTC losses had almost touched $1.5bn, up from $1.1bn in Q3.
Iger has now revealed that more than 3.5% of the Disney workforce will be let go, a move designed to placate Wall Street discontent, while a wholesale shift in strategy on the content side has also been unveiled.
Disney aims to save around $3bn on content investment over the next two years, with Iger highlighting that the Mouse House would “aggressively curate” its offering.
He added, however, that the company’s streaming services – whose output ranges from The Mandalorian and Abbot Elementary on Disney+ to Dopesick on Hulu – would remain its main priority.
Unwinding Chapek’s calls
Three new divisions have been created, made up of its parks & experiences businesses, a separate ESPN division, and a TV/film arm to be known as Disney Entertainment.
The latter will be led by Disney duo Dana Walden and Alan Bergman, and will replace Disney Media & Entertainment Distribution, the short-lived content and sales arm that had been led by Kareem Daniel. He left last year, just a day after Iger’s return.
The “significant transformation”, as Iger described the changes, will see Disney+ and its other streaming services, including Hulu but excluding ESPN+, brought into the same division.
It will also include Disney’s studio operations, although how the likes of 20th Century Television and ABC Signature will be combined and aligned has not been revealed.
Iger said the overhaul was part of a creative shift, aimed at “returning greater authority to our creative leaders and making them accountable for how their content performs financially.
“Our former structure severed that link and that must be restored,” he added, underlining his well-known opinion of Chapek’s own overhaul. It also ensures former Fox exec Walden will now wield more power over Disney’s overall operation, along with Bergman.
Disney is also looking to return to third-party production and distribution, an area that had been all but disbanded and the Mouse House focused on producing content for its own services.
Iger added that the company had “opportunities, using the great talent we have, to create for third parties and we’re going to look at that very seriously.”
He added: “I actually think there’s a nice opportunity to create a growth business for the company, but it’s way too soon to predict what that can be.”
Iger, who said the changes would “better position us to weather future disruption and global economic challenges”, revealed the restructuring as Disney revealed mixed Q1 results.
Streaming losses were stemmed at $1.1bn but subscriber numbers down by 2.4 million, although almost all of those losses were via the Indian service Disney+ Hotstar.
Outside of North America, subscriptions rose by 1.1 million to almost 58 million, while 200,000 new customers in the US and Canada were added over the quarter.
Total subs, excluding Disney+ Hotstar, hit 104.3 million subscribers, up 102.9 million, while revenues rose 8% to $23.5bn between October and December. Profits were also up by 11% to $1.3bn.