Walt Disney has announced to slash 7,000 jobs as part of a major restructuring by CEO Bob Iger which is aimed at saving $5.5 billion in costs and making its streaming business profitable. The layoffs under the recently reinstated CEO comprise an estimated 3.6 per cent of Disney’s global workforce, reported news agency Reuters. Shares of Disney climbed 4.7 percent to $117.22 in after-hours trading.
The measures that included reinstating a dividend for shareholders tried to assuage the concerns of activist investor Nelson Peltz who claimed that the Mouse House was overspending on streaming.
“We are pleased that Disney is listening,” a spokesperson for Peltz’s Trian Group said in a statement late Wednesday.
What is Disney’s restructuring plan aimed at?
The latest plan involves cutting costs and returning power to creative executives. The company aims to restructure into three segments, which will include an entertainment unit with film, television, and streaming; a sports-focused ESPN unit; and the last being Disney parks, experiences, and products.
“This reorganization will result in a more cost-effective, coordinated approach to our operations,” Iger informed analysts during a conference call. “We are committed to running efficiently, especially in a challenging environment,” he added
The CEO noted that said streaming remained Disney’s top priority.
ALSO READ: ‘Twitter Outage: Users Unable To Tweet, Access DMs And Tweetdeck In Latest Glitch (abplive.com)
The company would remain focused more on core brands and franchises and aggressively curate general entertainment content.
Iger also said he would also push the company’s board to restore the shareholder dividend by year end. Chief Financial Officer Christine McCarthy said the initial dividend would likely be a ‘small fraction; of the pre-COVID level with a plan to increase it over time.
Disney’s move on job cut comes after Zoom’s Chief Executive Officer Eric Yuan on Tuesday announced in a blog that the company is laying off about 1,300 employees, or approximately 15 per cent of its staff adding that the changes will impact every part of the organization.