Disney plans to cut 3% of its total global workforce in a cost-saving move

Transcript

A MARTÍNEZ, HOST:

This week, Disney begins the first of three rounds of layoffs aimed at cutting 7,000 jobs from the company.

MICHEL MARTIN, HOST:

That's according to a memo circulated by CEO Bob Iger. Those job cuts amount to about 3% of the total global workforce of the entertainment giant.

MARTÍNEZ: Here to talk about what this means for Disney and consumers of its entertainment brands is NPR TV critic and media analyst Eric Deggans. Eric, 7,000 jobs - that is a lot. Why is this happening now?

ERIC DEGGANS, BYLINE: Well, the job reductions are something that Bob Iger first announced back in February, and they're part of about $5.5 billion in cost savings that the company is trying to implement. And this all seems to be part of an effort to restructure the company and show Wall Street investors that Disney can be a more disciplined venture at a time when there are worries about profitability and streaming, cord-cutting in cable TV and fears of an oncoming recession. And let's not forget, lots of media companies, including Amazon, Meta and us here at NPR, have been forced to implement significant layoffs due to downturns in advertising revenue and concerns about an ongoing economic climate.

MARTÍNEZ: Do we know anything about the rollout of the cuts? Which part of Disney will it affect?

DEGGANS: Well, Iger said in his memo that there would be one round of job reductions beginning this week, a larger group of layoffs in April and then a final group of cuts that would come just before the beginning of the summer. Word's just starting to spread about which areas of the company have been affected this week. But The Wall Street Journal reported that Disney eliminated a unit focused on creating next-generation storytelling experiences, including work in the virtual reality space called the Metaverse.

MARTÍNEZ: OK. Now, Bob Iger has a really interesting history. He returned to the CEO job in November after he had retired in 2021. He replaced the man who had succeeded him, Bob Chapek. Was Bob Iger expected to come back with such an extensive cost-cutting measure?

DEGGANS: Well, you know, Iger was expected to provide the kind of leadership that would calm down jittery investors on Wall Street and maybe ease tensions with the creative community that had kind of ramped up during Chapek's tenure. But he also faced a challenge from an activist investor named Nelson Peltz, who tried to get a seat on Disney's board, saying that some of Iger's decisions showed poor financial management. Peltz didn't back down until Iger announced these cost-cutting measures.

So these changes can be seen as Iger showing the business world that he's willing to curb costs, move towards profitability, and, in particular, there's pressure to show that streaming services, like Disney+ will eventually make a profit. Now, at the same time, he's dismantling some of the changes that Chapek made during his tenure. He's restructuring Disney so people closer to the creative decisions in film and TV have a little bit more power.

MARTÍNEZ: Now, under the Disney umbrella, there are platforms such as ESPN and Hulu. Will any of those cutbacks extend to those properties?

DEGGANS: Well, I mean, that's uncertain right now. There is a question about what's going to happen at ESPN, which has seen its value affected by consumers dropping cable TV subscriptions. And Iger has also speculated publicly about the streaming service Hulu, which Disney currently owns about two-thirds. I mean, will Disney buy it all outright or are they going to sell their stake to someone else? And even as Iger works to find yet another successor to lead this company long-term, he faces the threat of a writer's strike, which could hobble TV and film production if the Writers Guild of America can't negotiate a new contract with Hollywood Studios this year. So I guess you could say there's a lot going on that could affect what consumers see from Disney platforms in the coming year.

MARTÍNEZ: Yeah, absolutely. That's NPR TV critic and media analyst Eric Deggans. Eric, thanks.

DEGGANS: Thank you.

(SOUNDBITE OF KORESMA'S "CLOUDS (INSIGHT VOL. 3)") Transcript provided by NPR, Copyright NPR.