Walt Disney Co on Monday began 7,000 layoffs announced earlier this year, as it seeks to control costs and create a more “streamlined” business, according to a letter Chief Executive Bob Iger sent to employees and seen by Reuters.
Several major divisions of the company – Disney Entertainment, Disney Parks, Experiences and Products, and corporate – will be impacted, according to a person familiar with the matter. 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 retrenchment since its early euphoric embrace of video streaming, when established media companies lost billions as they launched competitors to Netflix Inc.
They started to rein in spending when Netflix posted its first loss of subscribers in a decade in early 2022, and Wall Street began prioritizing profitability over subscriber growth.
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.” The final round will start before the beginning of the summer, the letter said.
The Burbank entertainment conglomerate announced in February that it would eliminate 7,000 jobs as part of an effort to save $5.5 billion in costs and make its money-losing streaming business profitable.
“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.
Details of the layoffs 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 Disney, as rumors 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 Iger returned as the company’s CEO.
“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 take out 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 layoffs.
“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.
© 2023 Thomson/Reuters. All rights reserved.
Read the full article here