What’s going on:
During its quarterly earnings call with investors on Wednesday, Disney announced plans to cut $5.5 billion in costs: $3 billion coming from content and the remaining $2.5 billion from non-content related areas.
Additionally, they are cutting 7,000 jobs, representing 3% of their global workforce of 220,000 (166,000 of which are based in the U.S.). Executives stated that approximately $1 billion in cost cutting has already been implemented since last quarter
Why it matters:
When Bob Iger was brought back to Disney as CEO in November, there were mixed reactions. On the one hand, his return was welcomed with cheers in Hollywood. On the other, Wall Street responded with skepticism due to the massive layoffs and restructure he announced and Disney’s mounting financial struggles.
How it’ll impact the future:
Iger noted on the earnings call that Disney may have been too ambitious in attempting to maximize streaming growth, thus impacting their earnings, and that adjustments in both pricing and advertising strategies are imminent. He said we will consider full ownership of Hulu (currently co-owned by Comcast), the distribution of content across Disney+ and Hulu, and whether to keep or sell ESPN.