Walt Disney Co. announced plans to cut 7,000 jobs worldwide as part of its restructuring efforts to save billions in costs. The planned layoffs represent around 3.6 percent of Disney's global workforce.
Chief Executive Officer Bob Iger, during the company's first-quarter earnings call, said the restructuring would help the firm save $5.5 billion in costs.
With the planned cost-cutting initiatives, the company also intends to reinstate a dividend by the end of the calendar year. Disney had suspended its dividend payments during the Covid pandemic.
The company expects the proposed cost savings to include reductions to non-content costs that will total around $2.5 billion.
In general, these reductions are expected to comprise approximately 50 percent marketing, 30 percent labor, and 20 percent technology, procurement, and other expenses. Disney said $1 billion in savings is already underway. The savings will come from reductions in SG&A and other operating costs across the firm.
On the content side, the company expects to deliver around $3 billion in savings over the next few years, excluding sports.
Under the strategic reorganization, Disney will restructure itself into three core business segments, such as Disney Entertainment that comprises film, television and streaming; a sports-focused ESPN unit; and Disney Parks, Experiences, and Products.
According to Iger, streaming remains Disney's top priority, and the current forecasts indicate Disney+, which was launched three years ago, will hit profitability by the end of fiscal 2024.
Iger further said that the company "will focus even more on our core brands and franchises, which have consistently delivered higher returns. We will aggressively curate our general entertainment content. We will reassess all markets we have launched in and also determine the right balance between global and local content. We'll adjust our pricing strategy, including a full examination of our promotional strategies."
As of October 1, Disney had about 220,000 workers, of which around 166,000 employees were in the United States.
In the after-hours trading on the NYSE, Disney shares gained 5.4 percent to trade at $117.82.
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