Disney has announced plans to cut 7,000 jobs and $5.5 billion in costs after it first reported a drop in subscriber numbers.
The job cuts represent just over 3% of Disney’s global workforce of approximately 220,000. The American media giant lost 2.4 million Disney + subscribers in the last three months of 2022, bringing the total to 161.8 million.
In December, Disney raised its US prices from $7.99 to $10.99 per month, while the new ad-funded tier remains $7.99. The company is expected to make similar changes in the UK this year.
Disney reported another $1.1 billion in losses in its streaming division, which also includes Hulu and ESPN+, though this was smaller than in the previous three months.
Chief executive Bob Iger, who returned to the position in November after ousting predecessor Bob Chapek, vowed to rein in costs.
“We are embarking on a major transformation, one that will maximize the potential of our world-class creative teams and our unparalleled brands and franchises,” he said.
“We believe the work we are doing to transform our business around creativity, while reducing costs, will drive sustainable growth and profitability for our streaming business, better positioning us to face future disruptions and global economic challenges. and will deliver value to our shareholders. ”
Disney has suffered a slump in its stock price and is facing a high-profile proxy battle with activist investor Nelson Peltz, who has built up a $900 million stake through his Trian Partners.
Mr. Peltz has attacked Disney for its “over-the-top” executive compensation and a series of recent acquisitions, most notably the successful $71 billion acquisition of 21st Century Fox in 2019.
Disney has hit back at the activist, saying he doesn’t understand the media giant’s business and doesn’t have the skills needed to help the board.
Rival Netflix also recorded a first-ever drop in subscribers last year as consumers began to tighten their belts amid a deepening cost-of-living crisis.
Both Disney and Netflix have launched cheaper, ad-funded tiers of their streaming platforms in an effort to reverse the decline.
Mr. Iger has already outlined a number of changes since his return as CEO, including the axing of Disney’s media and entertainment distribution unit.
The division, which centralized the sale and distribution of motion pictures and television, was the brainchild of Mr. Chapek. The abolition reflects efforts to return more power to creatives.
Mr Iger called staff back to the office last month, suggesting the shift to working from home was stifling creativity and has frozen new hires.
Despite the drop in streaming, Disney’s overall revenues and profits beat forecasts thanks to the success of the blockbusters Avatar: Way of Water and Black Panther: Wakanda Forever, as well as an increase in theme park visits during the holiday season.
Sales were $23.5 billion, while net income was $1.3 billion.
Disney is reportedly considering licensing more of its movies and TV series to rivals – a reversal of its previous strategy as it seeks new sources of revenue.
It is also believed that the company is giving more priority to theatrical releases after years of pushing new movies and TV shows directly to its streaming platforms.
There is also speculation that Disney could spin off its ESPN sports network — a move previously touted by activist Dan Loeb.