Even the House of Mouse isn’t immune to the challenging economic climate.
After Disney lost $1.5 billion in direct-to-consumer revenue last quarter, former CEO Bob Iger made his return, ousting his successor Bob Chapek.
In an earnings call this evening, Iger’s first earnings call since his return, the CEO announced an immediate restructuring at Disney, resulting in 7,000 layoffs.
The move pretty much undoes the Disney Media and Entertainment Distribution Group created by Chapek, instead creating three divisions.
Disney Entertainment will include film, TV and most streaming assets; ESPN will form its own division and include the linear networks and ESPN+; and the Parks, Experiences and Products group will have the theme parks and consumer products teams.
Alan Bergman and Dana Walden will serve as co-heads of the entertainment group, and Jimmy Pitaro will stay on as head of ESPN. Josh D’Amaro will remain the lead of parks and experiences.
Iger also aims to eliminate $5.5 billion in costs as part of the major corporate reorganization, designed to return power to the company’s content executives and emphasize sports media. Three billion of the shaved costs are expected to come from the content side, excluding sports.
“This organization will result in a more cost-effective, coordinated and streamlined approach to our operations, and we are committed to running our businesses more efficiently, especially in a challenging economic environment,” Iger said during the earnings call.
Streaming struggles
Disney’s streaming business once again posted an operating loss, this time $1.05 billion for the company’s first fiscal quarter of the year. Meanwhile, flagship streaming service Disney+ posted its first subscriber loss since its 2019 launch.
The service added 200,000 subscribers in the U.S. but lost 2.4 million customers globally, coming in at 161.8 million total customers. Last quarter, Disney+ added nearly two million subscribers in the U.S. and Canada alone.
Part of that loss can be attributed to a price hike that kicked in when the company launched its ad-supported tier in December. Still, most of the Disney+ losses came from Hotstar India following the loss of cricket rights.
The company’s movie slate is still strong, with the newest Avatar film and the Black Panther sequel, Wakanda Forever, both performing well.
“Wakanda Forever received five Oscar nominations, and it launched on Disney+ last week and has quickly become one of the most successful Marvel films on the platform,” Iger said.
Hulu (including its Hulu + Live TV offering), which operates only in the U.S., added 800,000 subscribers but saw a decrease in results at the streaming service, which the company attributed to higher programming and production costs and a decrease in ad revenue. It now has 48 million subscribers.
ESPN+ posted improved results, adding 600,000 subscribers to reach 24.9 million customers. Disney pointed to growth in subscription revenue thanks to increases in retail pricing and subscribers.
But ESPN could look different in the near future. Though Disney is still committed to ESPN as a linear network, Iger noted that the streaming service ESPN+ has performed better than expected—and the brand could move to streaming only at some point if it makes sense financially.
