Disney
Disney axes jobs, plans ‘Toy Story’ and ‘Frozen’ sequels
Disney CEO Bob Iger has recently unveiled a series of significant developments within the company. In an effort to streamline operations and bolster profitability, The Walt Disney Co. is set to eliminate 7,000 jobs, which represents approximately 3.6% of its global workforce. This multi-billion dollar cost-saving restructuring initiative comes as part of Iger’s comprehensive plan to enhance the financial outlook of the entertainment giant.
Having returned from retirement and reassumed control of the company in late November, this marks Iger’s first quarterly results announcement. The decision to reappoint him was prompted by a previous quarterly group loss of $1.5 billion, which led to the departure of Bob Chapek. Tasked with rejuvenating Disney’s fortunes, Iger aims to save $5.5 billion in costs through a “significant transformation” that primarily focuses on improving profitability within the company’s streaming business.
Disney’s streaming venture, Disney+, suffered a decline in subscriptions during the October-December quarter, resulting in a loss exceeding $1 billion. Consequently, the company intends to implement a more efficient and coordinated approach to its operations, with Iger emphasizing the importance of running efficiently in a challenging environment. The restructuring will not only target cost reduction but also introduce changes to executive roles and responsibilities within Disney’s various divisions.
Under the new structure, creative executives will assume greater authority in determining the production, marketing, and distribution of movies and TV series. By making them accountable for the financial performance of their content, Disney aims to empower creative leaders and maximize profitability.
While Disney faced setbacks in its streaming sector, the company’s overall net profits amounted to $1.8 billion, surpassing Wall Street forecasts. The theme parks segment played a significant role in this success, generating an operating profit of $3.1 billion during the quarter. With revenue growing by 8% to $23.51 billion compared to the previous year, Disney outperformed analyst expectations of $23.44 billion.
However, the direct-to-consumer business, encompassing streaming services such as Disney+ and Hulu, recorded an operating loss of $1.1 billion. Higher programming and production costs contributed to this setback. Disney+ witnessed a decline of 2.4 million subscribers, leaving the service with 161.8 million subscribers by the end of the quarter. Conversely, Hulu and ESPN+ experienced a 2% increase in paid subscribers.
Despite the challenges, Iger reiterates that streaming remains Disney’s top priority. The company plans to intensify its focus on core brands and franchises while aggressively curating its general entertainment content. In line with this strategy, Iger unveiled plans for sequels to some of Disney’s most popular animated franchises, including ‘Toy Story,’ ‘Frozen,’ and ‘Zootopia.’ These forthcoming sequels aim to capitalize on the immense success of their predecessors, with each installment of the respective series grossing over $1 billion at the box office. Additionally, there are talks of a sequel to the acclaimed film ‘Inside Out.’
While these announcements have generated excitement among fans, some remain skeptical about the planned sequels. However, Iger expresses confidence in the potential of these franchises and underscores the company’s commitment to leveraging its unrivaled brands and franchises for future success.
Looking ahead, Disney expects its streaming service, Disney+, to achieve profitability by the end of the next fiscal year in September 2024. With a renewed focus on cost-effectiveness, creative leadership, and the power of its beloved franchises, Disney aims to navigate the ever-evolving entertainment landscape and ensure its long-term growth and prosperity.
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