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EXCLUSIVE: With Disney’s April 3 shareholder meeting — a virtual affair this year — less than two weeks away, there’s some clarity about the company’s plans to downsize and cut costs.
Insiders tell Deadline that several rounds of cuts are being prepared. The first is being targeted for next week, we’re hearing. (March 30 or 31 have been circulated as possible dates, but this has not been confirmed.) According to sources, there will be a big wave in late April, dubbed “the big one” or a “bloodbath” when it is large Part of the cuts are expected.
Information about a possible third round of layoffs varies. Some say it could come between late March and late April, while others note it could follow in late April if deemed necessary. Disney declined to comment.
Senior Disney executives have been churning out details about the cuts over the past few weeks. We hear that most managers have already submitted their layoff target reports, the step companies take before laying off a large workforce.
CEO Bob Iger revealed the scope of the cuts during the company’s quarterly conference call with Wall Street analysts on Feb. 8. Plans to lay off 7,000 employees, about 3% of the company’s global workforce, “are not being taken lightly,” Iger said. The headcount reduction is a cornerstone of efforts to achieve $5.5 billion in overall cost savings.
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Following his promise to investors, Iger is determined to make a “statement” in the coming weeks, an insider says.
The cuts are expected to be spread across the company’s three businesses, entertainment, ESPN and parks, experiences and products, with marketing and sales — including the defunct Disney Media and Entertainment Distribution entity — among the businesses ripe for consolidation. Virtually every part of the vast entertainment arena is expected to be impacted in a significant way. There have been rumors of possible significant cuts at Hulu, as well as sister studios ABC Signature and 20th Television, both on the business and content side. Despite widespread speculation about a possible merger of some form between the two major TV studios, it still doesn’t seem imminent.
ESPN, which is now a separate division, is also under scrutiny. While it has thinned its ranks in recent years as pay-TV distribution plummeted to about 74 million from a peak of 100 million households in 2011, the sports powerhouse has faced a steady rise in rights fees. Stephen A. Smith, one of ESPN’s top personalities, recently noted that the network “is going to have cuts.” He recently addressed the issue on an episode of his Know Mercy podcast, which is produced off Disney by Audacy’s Cadence13. “Damn, as far as I know, I could be one of them,” mused Smith, who reportedly makes more than $13 million a year hosting First Take, among many other roles. “I doubt that now. But it’s possible. Nobody knows.”
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At the time of the earnings report, Iger said the $1 billion cost savings goal was on the way. A month later, during an appearance at a Morgan Stanley conference, he identified a particular area of overlap that had emerged under former CEO Bob Chapek. The marketing of streaming services has been “decoupled” from the marketing of individual series or films. “That had to be put back together, not only for reasons of sanity, but also because there are ways to reduce spending,” he said.
Disney is far from alone when it comes to pulling out — media and tech companies have laid off thousands of workers over the past tumultuous few months, with rising interest rates and volatility in exchange rates being among the economic headwinds.
Investors initially cheered Iger’s revelation about rationalizing and increasing shares, but the stock has fallen in recent weeks. It closed at $96.54 on Tuesday and is up about 2% in 2023 to date. Still, shares aren’t much higher now than they were when they crash-landed in March 2020. That was shortly after Iger passed the CEO baton to Bob Chapek and Covid began to besiege nearly all of Disney’s operations.
Lynette Rice and Dominic Patten contributed to this report.