Entertainment giant Disney said Wednesday it was laying off 7,000 employees, as CEO Bob Iger announced a reorganization of the company he returned to lead last year.
The job cuts follow similar moves by US tech giants dialing back from a hiring spurt that began during the height of the pandemic.
“I do not make this decision lightly,” Iger said on a call to analysts after Disney posted its latest quarterly earnings.
In its 2021 annual report, the group said it employed 190,000 people worldwide, 80 percent of whom were full-time.
“We are going to take a really hard look at the costs for everything that we make, both across television and film,” Iger said.
“Because things in a very competitive world have just simply gotten more expensive.”
The storied company founded by Walt Disney said its streaming service saw its first ever fall in subscribers last quarter as consumers cut back on spending.
Subscribers to Disney+, the streaming archrival to Netflix, fell one percent to 161.8 million customers on December 31, compared to three months earlier.
Analysts had broadly expected the decline, and the Disney share price climbed more than five percent in post-session trading.
“There are still big challenges ahead for Disney,” Insider Intelligence principal analyst Paul Verna said in a note to investors.
“Its traditional TV business is eroding, its streaming operation is not yet profitable, and it’s facing pressure from an activist investor to rein in costs and plan for a post-Iger succession.”
Disney is also going to look at the volume of content it makes and the pricing of its streaming services, Iger told analysts.
“We were in a global arms race for subscribers,” Iger said of Disney+ early days as a challenger to Netflix and Amazon Prime.
“I think we might have gotten a bit too aggressive in terms of our promotion; and we are going to take a look at that.”
Disney remains devoted to blockbuster franchises that include recent Marvel super hero film “Black Panther: Wakanda Forever,” and has sequels in the works to hit animation films “Frozen” and “Zootopia,” Iger said.
It remains to be seen whether the layoffs and corporate restructuring will appease critics and set Disney on more solid footing, Verna cautioned.
Across its vast entertainment empire that includes theme parks, film studios and cruise ships, the Disney Group saw revenues of $23.5 billion for the three month period, better than analysts predicted.
Iger, who stepped down as CEO in 2020 after nearly two decades helming the storied company, was brought back after the board of directors ousted his replacement Bob Chapek. It was disappointed in his ability to rein in costs.
Chapek was also singled out for centralizing power around a small group of executives who made important decisions on content despite having little Hollywood experience.
Iger’s new stint as CEO is facing major headwinds, including a campaign by activist investor Nelson Petz who is demanding major cost-cutting after he said Disney overpaid to buy the 20th Century Fox movie studio.
Disney is also caught in a spat with Florida governor Ron DeSantis who is looking to wrest back control of the area around Walt Disney World that has until now been controlled by the entertainment giant.
The politically conservative DeSantis, who is tipped as a possible US presidential candidate, is furious at Disney for criticizing a state law banning school lessons on sexual orientation.
Disney+’s struggles come as its archrival Netflix has emerged from its own rough patch and announced a solid boost in new subscribers for the end of last year.
In its own effort to rein back costs, Netflix has begun a campaign to stop password sharing among its hundreds of millions of global subscribers.
On Wednesday, Netflix revealed it had begun to crack down on password sharing in Canada, New Zealand, Portugal, and Spain as it continues to roll out its new policy worldwide.