Walt Disney started layoffs announced earlier in the year on Monday. Seven thousand workers will lose their jobs. The job cuts will affect many departments of the company, including Disney Parks, Disney Entertainment or the corporate department.
A letter from CEO Bob Iger sent to employees said the company was trying to control costs and “improve” the business, Reuters reported.
According to a person familiar with the matter, several major divisions of the company – Disney Entertainment, Disney Parks, Experiences and Products and Corporate – will be affected. For now, ESPN will not be affected by this week’s round of cuts, but it is expected to be included in later ones.
Entertainment companies are in some regression after the initial euphoria related to the introduction of streaming services. The costs of creating competition for Netflix are counted in billions. Spending began to be cut back after Netflix reported its first loss of subscriptions in 10 years in early 2022, and investors on Wall Street began to look more at the profitability of the business than at the pace of subscription growth.
Layoffs to make up for losses
In a letter to employees, Iger wrote that the first group of workers affected by job cuts would be informed within the next four days. The second round of redundancies will take place in April, and the last round before the beginning of summer.
Disney plans to lay off 7,000 employees to save $5.5 billion and make its streaming business profitable.
“The harsh 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 jobs.” The details of the exemptions are strictly protected by the company.
“It’s been in the works for a long time,” SVB MoffettNathanson analyst Michael Nathanson told Reuters, adding that the company first started “whispering” about the need to cover costs last fall, when Bob Chapek was still Disney’s chief executive.
Main photo source: BlackMac / Shutterstock