Disney has confirmed that the company will be reducing its workforce by nearly 7,000 workers. In a memo sent to employees on Monday, Disney CEO Bob Iger has announced that the first round of layoffs will begin this week, with a few days remaining before Disney’s annual shareholder meeting scheduled for April 3.
The memo confirms that there will be three rounds of cutbacks, with the second round being the largest. The restructuring comes as part of Iger’s plan to reach $5.5 billion in cost savings. The first group of impacted employees will receive their notices during the next four days. “Several thousand” more staff members will be reduced from the company next month, in April, and a final round of layoffs will occur “before the beginning of the summer.”
“In tough moments, we must always do what is required to ensure Disney can continue delivering exceptional entertainment to audiences and guests around the world – now, and long into the future,” wrote Iger in the memo.
With Iger back, Disney is undergoing a restructuring plan that will reverse Bob Chapek’s decisions as CEO. The Disney Media & Entertainment Distribution (DMED) team that Chapek formed will be disbanded. Kareem Daniel, one of Chapek’s key appointments and the former head of the DMED division, already left the company in November.
Disney’s entertainment divisions, including Disney Studios, General Entertainment, Animation, Disney+, 20th Century Studios, Searchlight, and Hulu, will be consolidated under the leadership of Dana Walden and Alan Bergman within the new Disney Entertainment umbrella. Parks/Products and ESPN divisions, however, will remain separate.
All branches of the company are expected to see layoffs, but the Entertainment division is expected to see the most significant cuts on both the business and content sides, affecting not only Hulu but also sister studios ABC Signature and 20th Television. ESPN is predicted to be the least affected by Iger’s decision.
“The difficult reality of many colleagues and friends leaving Disney is not something we take lightly. This company is home to the most talented and dedicated employees in the world, and so many of you bring a lifelong passion for Disney to your work here. That’s part of what makes working at Disney so special,” Iger wrote in his staff memo.
“It also makes it all the more difficult to say goodbye to wonderful people we care about. I want to offer my sincere thanks and appreciation to every departing employee for your numerous contributions and your devotion to this beloved company.”
The layoffs at Disney come as the company evaluates its strategic options. Iger has assured consumers that ESPN will most likely stay in the corporate fold, though it has the potential to offer a stand-alone streaming version of itself in the near future.
However, Iger has hinted that all scenarios could be on the table for Hulu, which is operated by Disney but not singularly owned by the media giant. Comcast has a 33% financial stake in Hulu, which Disney is expected to buy out in early 2024, or they can choose to completely withdraw from the streaming platform altogether. “It’s very tricky to assess Hulu’s long-term value right now, given the current market trends,” Iger publicly said this month when asked about his plans for the widely-loved streaming platform.
The layoffs will especially target DMED employees, but all Disney branches may be affected.
“The restructure of our business will allow us to operate more efficiently and effectively, enabling us to be even more responsive to consumer demand and increasing our ability to build and monetize great content in innovative ways,” Iger wrote.
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The restructuring comes after Iger returned to the CEO position last November after originally stepping down from the post in 2020. The plan aims to streamline Disney’s operations and better position it for the future.
While the pandemic has hit the company hard, with a significant drop in revenue and attendance at its theme parks, Disney has been able to pivot its focus towards streaming, which has seen a significant increase in demand.
“These actions will result in increased efficiencies, which will help us to better position ourselves for future growth,” said Iger in the memo.
Despite the layoffs, Disney seems to largely remain optimistic about its future. The company’s focus on streaming has helped it adapt to changing market trends, and with the planned restructuring, Disney hopes to become even more efficient and effective.
“The strategic direction we are taking creates an even stronger, more resilient Disney, and one that is ideally positioned to thrive in the years to come,” wrote Iger in the memo.
