- Deep cuts are coming. Walt Disney is moving toward thousands of job cuts, with some managers asked to target 20% in annual cost savings, according to people familiar with the matter cited by Bloomberg. The savings could come from job eliminations as well as expense reductions.
- Some units will be hit harder. Disney’s operations include theme parks, TV channels and the movie studio, and some will be affected disproportionately, the people said. Disney declined to comment.
- Part of the savings will be reinvested. CEO Josh D’Amaro aims to put a portion back into film and TV programming, technology, and the theme parks and cruise ship businesses, Bloomberg reported.
- This follows years of cuts. Disney has already cut billions of dollars in costs and thousands of positions across ABC, Pixar, ESPN, the film studio and the experiences unit, and had 231,000 employees worldwide at the end of its last fiscal year.
What Happened?
The planned layoffs would be one of the first big moves under D’Amaro. Disney has promised double-digit growth in adjusted earnings per share in the current fiscal year, according to Bloomberg. The Wall Street Journal reported on Oct. 1 that Disney was planning a restructuring of its TV division and cuts in its legal and global affairs unit. Disney President Dana Walden said last month that “there is a need to constantly evaluate how you’re structured and how big is the organization.”
Why It Matters?
Disney is under pressure as revenue from traditional television declines, streaming subscriber growth slows and more viewers move to social media, online video and streaming services backed by tech giants such as Amazon and Apple. Netflix, Sony Pictures Entertainment and Paramount and Warner Bros. divisions have also cut jobs. Cost cuts of this size could support Disney’s earnings growth target, while reinvesting in parks and content shows where management sees growth.
What’s Next?
Watch for official details on the size and timing of the job cuts and which divisions are most affected. Investors will look to Disney’s next earnings report for updated cost-savings targets and confirmation of its double-digit EPS growth goal.
Affected Tickers and Coins: DIS, NFLX
Source: Bloomberg
