Disney Chief Executive Bob Iger has announced plans to cut 7,000 jobs, or about 3%, as part of a sweeping restructuring that he says could save $5.5 billion over the next few years and make his profitable streaming. .
Investors are waiting to hear Iger’s strategic plan to reinvigorate the company since his market-surprising reappointment in November. In a statement, he said Disney was “embarking on a significant transformation” that would lead to “sustained growth and profitability” in streaming.
Disney shares rose 9% in trading following the announcement.
Iger’s predecessor, Bob Chapek, was fired by the company’s board late last year after Disney’s streaming business posted a quarterly loss of $1.5 billion. The company pledged to cut losses by $200 million in the most recent quarter, but beat that target by cutting losses by about $400 million to $1.1 billion, according to an earnings report released on Wednesday. (8).
Disney’s revenue increased 8% to $23.5 billion for the quarter, and net income increased 11% to $1.3 billion. Its earnings of $0.99 per share were well above Wall Street’s expectations of $0.78, but down from $1.06 a year earlier.
Disney Plus, its flagship streaming service, lost an estimated 2.4 million subscribers in the quarter, mainly due to the loss of rights to air the Indian Premier League. Iger, like his peers in traditional media groups, is looking to emphasize profitability as the main streaming metric, rather than subscription growth, but his overall number of streaming subscribers — which also includes ESPN Plus and Hulu, along with with Disney Plus—was roughly flat from the previous quarter at 235 million.
Iger is under pressure from activist investor Nelson Peltz, who is seeking a seat on Disney’s board. The company urged shareholders to reject Peltz’s pressure when it holds its annual meeting on April 3.
Peltz criticized Disney for eliminating its dividend, a move taken during the coronavirus pandemic. Iger, however, told investors on Wednesday that he would ask the board to resume paying dividends by the end of this year.
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