Disney said Wednesday that it plans to reorganize into three segments.
The media and entertainment giant said it would now be made up of three divisions:
- Disney Entertainment, which includes most of its streaming and media operations.
- A division of ESPN that includes the television network and streaming service.
- A unit of Parks, Experiences and Products
The move marks the most significant action Bob Iger has taken since he returned to the company as chief executive in November. Disney announced the changes minutes later. posted its most recent quarterly earnings.
On Wednesday, during its quarterly earnings call with investors, Disney also announced it would cut $5.5 billion in costs, to be made up of $3 billion of content, excluding sports, and the remaining $2.5 billion of non-content cuts.
Disney also said it would cut 7,000 jobs from its workforce. That would be about 3% of the roughly 220,000 people he employed as of October 1. according to an SEC filingwith approximately 166,000 in the US and around 54,000 internationally.
Disney shares rose more than 5% in the secondary market.
Media companies, like Discovery by Warner Bros., have been cutting spending on content and looking to make their streaming businesses profitable. Increased competition has led to a slowdown in subscriber growth, and companies have been looking for new avenues of revenue growth. Some, like Disney+ and Netflix, have added cheaper ad-supported options.
“We will be looking very carefully at the cost of everything we do in television and film,” Iger said on a call with investors on Wednesday.
The shakeup has been underway since Iger returned to the helm of Disney, replacing his hand-picked successor, Bob Chapek.
The entertainment group will be led by top lieutenants Dana Walden and Alan Bergman, who are each considered contenders take over from Iger in less than two years. ESPN Chairman Jimmy Pitaro will lead the ESPN segment, while Josh D’Amaro, already the head of Disney’s parks, experiences and merchandise segment, will remain at the helm.
ESPN’s future under Disney ownership has been a question for some time for investors. Last year, activist investor Third Point had urged the company to expand ESPN. Disney and the third point later reached an agreementafter changing course on his thoughts for the future of ESPN.
Elimination of Chapek It came shortly after Disney reported its fiscal fourth quarter earnings, disappointing in earnings and certain key revenue segments. Chapek also warned that Disney’s strong streaming numbers would diminish in the future. He had also told employees soon after that Disney would cut costs through hiring freezes, layoffs and other measures.
Shortly after his return, iger sent a note to the employees who announced that the business would be reorganized, particularly the Disney Media and Entertainment unit. The shakeup immediately meant the departure of Kareem Daniel, the head of the company’s former media and entertainment unit and Chapek’s right-hand man.
Iger had said he would put more “decision making in the hands of our creative teams and streamline costs” at the time. The goal would be to have a new structure in the coming months, with elements remaining from DMED, CNBC reported. added during a town hall that he would not lift the company’s hiring freeze while he reassessed Disney’s cost structure.
On Wednesday, Iger echoed those comments again about giving control back to the company’s creative minds.
“Our company is driven by storytelling and creativity, and virtually every dollar we make, every transaction, every interaction with our consumers, emanates from something creative,” Iger said Wednesday. “I have always believed that the best way to stimulate great creativity is to make sure that the people who manage the creative processes feel empowered.”
