The pandemic was kind to Disney’s streaming services, helping it amass millions of subscribers. But as per the latest report it is becoming harder to find the silver lining as Disney+ lost almost 2.4 million subscribers in the last quarter. This is the first fiscal earnings report after Bob Iger returned to take the helm. The media company also announced that Disney layoffs are in the pipeline as they try to cut costs and reorganize the firm.
When Bob Iger was brought back last year, industry experts expected him to make significant changes to the company. And despite subscriber losses, the Disney earnings report looks good.
In the coming months, Bob Iger will be busy pruning what is not required and setting systems in place to make the media conglomerate a thriving business for the next decade.
Disney earnings
Disney’s fiscal first-quarter earnings report resulted in its stock climbing nearly 5% in after-hours trading. The earnings beat on the top and bottom lie.
According to Refinitiv’s analysis, 78 cents was the expected earnings per share against the final 99 cents per share that the company posted. Revenue stood at $23.51 billion slightly surpassing the expected $23.37 billion.
Reminding people that the company is preparing for a resilient future, Bob Iger, in a statement stated, “We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders.”
Disney also has plans to introduce cost-cutting measures, so that it can save around $5.5 billion in expenses.
The Q1 2023 earnings report also revealed that the Disney+ global subscriber base declined to 161.8 million, while the number stood at 164.2 million in the last quarter — a decline of 2.4 million subscribers. The Subscriber loss might be attributed to a hike in prices to its ad-free plan.
On the other hand, it added over 200,000 subscribers in the US and Canada.
Disney layoffs
Bob Iger’s cost-cutting measures include Disney layoffs. The move is part of the chief executive’s plans to streamline the company’s functioning. It will be divided into three main divisions – Disney Entertainment comprising media and streaming services, ESPN Division which includes ESPN+ and the TV network, and Parks, Experiences and Products Unit that operates theme parks and offers curated experiences.
Out of the proposed $5.5 billion cut, $3 billion will come from the content side of things.
The Disney layoffs will affect around 7,000 employees, reducing its global workforce by about 3%. Disney executives revealed that a $1 billion cost-cut is already in motion since the last quarter.
“We will take a very hard look at the cost of everything we make across television and film,” Iger told investors on February 8. Most media companies are adopting a cautious approach and shelving budgets to repurpose their firms into cost-effective models. An increase in competition has also hurt big players like Disney+ and Netflix, who have now added ad-supported tiers to offer cheaper options to subscribers.
Iger also addressed rumors surrounding ESPN’s ownership and clarified that the company is not engaged in any discussion or negotiation involving an ESPN spin off.
The restructuring will focus on giving creative minds greater control while reducing costs. Iger also stated in a town hall that despite the Disney layoffs, the hiring freeze announced earlier would remain.
“I have always believed that the best way to spur great creativity is to make sure the people who are managing the creative processes feel empowered,” the CEO said on Wednesday.
As competition heats up, experts speculate that Disney might also be exploring options to license its shows and movies to other providers. Traditionally, Disney has stuck to keeping its big ticket items close to its vest.
