Disney, the well-known entertainment conglomerate, announced on Wednesday that it would be cutting jobs for 7,000 employees. This move came after the company reported its latest quarterly earnings and was the first major decision made by CEO Bob Iger, who was asked to return to lead the company at the end of last year. The job cuts come amid a similar trend of layoffs among US tech giants, who are scaling back on hiring as the economy slows down.
In a call with analysts, Iger expressed his regret about the decision to lay off workers. He said, “I do not make this decision lightly. I have enormous respect and appreciation for the talent and dedication of our employees worldwide.” According to Disney’s 2021 annual report, the company employed 190,000 people globally as of October 2, 2021, with 80% of them being full-time workers.
Unfortunately, Disney’s streaming service saw its first ever drop in subscribers last quarter as consumers cut back on spending. Disney+, which competes with Netflix, saw a 1% decrease in subscribers, going from 168.1 million customers on December 31 to 165.1 million three months prior. Despite this decline in subscribers, analysts had largely expected it, and Disney’s stock price still went up by 8% in post-session trading.
The entertainment giant reported revenue of $23.5 billion for the three-month period, which was better than expected by analysts. This, along with the lower-than-anticipated operating losses of $1 billion for its streaming platforms, gave investors confidence in the company’s future.
Bob Iger, who stepped down as CEO in 2020 after nearly two decades at the helm of the company, was brought back after the board of directors ousted his replacement Bob Chapek for not being able to control costs effectively. Chapek was also criticized for centralizing power among a small group of executives with limited Hollywood experience, who made important decisions about content.
Iger’s return to the CEO position comes with several challenges, including a campaign by activist investor Nelson Petz, who is demanding major cost-cutting after claiming that Disney overpaid for the 20th Century Fox movie studio. The company is also caught in a dispute with Florida Governor Ron DeSantis, who wants to regain control of the area around Walt Disney World that has been controlled by the entertainment giant. DeSantis, who is a possible US presidential candidate, is angry at Disney for criticizing a state law that bans lessons on sexual orientation in schools.
While Disney+ has been struggling, its rival Netflix has been doing well and announced a boost in new subscribers at the end of last year. To control costs, Netflix has begun a campaign to stop password sharing among its hundreds of millions of global subscribers. On Wednesday, the company revealed that it had started cracking down on password sharing in Canada, New Zealand, Portugal, and Spain, and would continue to roll out this policy worldwide.