The decision by Bob Iger comes in with an effort to make the company’s streaming business profitable and includes plans to reduce $3 billion from its budget for TV shows and movies and other non-content-related areas
Walt Disney Chief Executive Officer Bob Iger announced a widespread refurbishment that includes the cutting of 7,000 employees and $5.5 billion in cost savings. The decision comes in with an effort to make the company’s streaming business profitable and includes plans to reduce $3 billion from its budget for TV shows and movies and other non-content related areas. In a conference call with the investors, Iger stated that around $1 billion of the savings are in progress already.
The Dramatic Revamp
In its decision to cut spending, Disney will be reformed mainly into three segments: an entertainment segment, the theme park section, and the ESPN sports network. The entertainment section will include the company’s streaming business, film, and TV and the theme park section includes consumer products and cruise products. “This reorganization will result in a more cost-effective, coordinated approach to our operations,” said Bob Iger. “We are committed to running efficiently, especially in a challenging environment.” The profit margin of the company is expected to grow owing to the new restructuring.
The boosting of film franchises, on the other hand, is mainly done through enhancing the online business and new strategic acquisitions. Apart from these, Iger also plans to ask the board about increasing the shareholder dividend by the end of the year.
After the disclosure and the company’s report of better-than-expected quarterly sales and earnings, led by the theme-parks segment, shares of Disney increased in extended trading. Bob Iger became the CEO of Disney in November once again after Chapek was fired.
Bob Iger also stated that the company’s ardor to increase streaming subscriptions when Wall Street was pleased with user growth rather than profitability led to price promotions that the company won’t practice frequently.
Drastic Turn of Events
Disney’s CEO of three years Bob Chapek was replaced in November 2022 due to the financial pressures faced by the company and Bob Iger returned as the CEO once again after serving from 2005 to 2020. The next year is crucial for the company and expects to run on profits in streaming. The outbreak of the pandemic, the reduction of visitors to the theme park, and other matters caused the board to re-invite Bob Iger to continue as the CEO.
Disney recently had an opportunity to generate sales by producing programming for other players and is presently considering licensing more TV series and films after keeping a large majority of titles to its own services. Disney theme parks have gained considerably according to the financial results announced by the company.
Endorsers to the Disney+ streaming business deteriorated by 1% in the quarter to 160.8 million, the first such decline, amid cancellations of the Hotstar service in India after Disney lost streaming rights to cricket. Disney reported that its profit for the three months ending December 31 was 99 cents per share, exceeding the 74-cent average analyst projection. Sales increased 7.8% to $23.5 billion, slightly exceeding expectations.
New ways to increase revenue
Disney theme parks continued to generate revenue and the earnings increased by 25% reaching $3 billion, including sales and earnings from consumer products. The firm is also planning to add the Avatar experience to its resort in southern California to attract more visitors.
The streaming industry suffered losses that more than doubled from a year earlier to $1.05 billion, although that was better than management had anticipated three months prior. Operating income for Disney’s traditional broadcast and cable TV division, which includes ESPN, declined 16% to $1.2 billion as a result of deterioration outside the US, while revenue fell 5% to $7 billion.