Deadline: Disney Layoff Rounds Likely Starting Before Annual Meeting; Details On Cuts Emerge

Story from Deadline:

With Disney’s April 3 shareholder meeting — a virtual affair this year — less than two weeks away, some clarity is emerging about the company’s plans to reduce staff and cut costs.

Insiders tell Deadline that multiple rounds of cuts are being prepared. The first one is being targeted for next week, we hear. (March 30 or March 31 have been floated as possible dates, but that has not been confirmed.) According to sources, there will be a big wave in late April, described as “the big one” or a “bloodbath,” when a large portion of the cuts are expected to come.

Information varies on a potential third round of layoffs. Some say it might come between the one in late March and the one in late April, while others note that it could follow the one in late April if it’s deemed necessary. Disney declined to comment.

Senior Disney executives have been hashing out specifics of the reductions in recent weeks. We hear that most managers already have submitted their layoff target reports, the step corporations take before a major workforce culling.

CEO Bob Iger revealed the scope of the cuts during the company’s February 8 quarterly earnings call with Wall Street analysts. Plans to let go of 7,000 staffers, roughly 3% of the company’s global workforce, are “not being taken lightly,” Iger said. The paring down of employee rolls is a cornerstone of the effort to reach $5.5 billion in overall cost savings.

Following his promise to investors, Iger is determined to make a “statement” in the coming weeks, one insider says.

The cuts are expected to be spread across the company’s three divisions — Entertainment; ESPN; and Parks, Experiences and Products — with marketing and distribution including at the disbanded Disney Media and Entertainment Distribution unit among the business areas ripe for consolidation. Virtually every part of the sprawling Entertainment division is expected to be impacted in a meaningful way. There have been rumors about potential significant cuts at Hulu as well as sister studios ABC Signature and 20th Television both on the business and content side. Despite rampant speculation about the two major TV studios potentially merging operations in some form, that still does not appear to be imminent.

ESPN, which is now its own distinct corporate division, also is being scrutinized. While it has thinned its ranks in recent years as pay-TV distribution has fallen from a peak of 100 million households in 2011 to about 74 million, the sports power at the same time is confronting 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 coming.” He addressed the topic on a recent episode of his podcast Know Mercy, which is produced outside of Disney by Audacy’s Cadence13. “Hell, for all I know, I might be one of them,” mused Smith, who reportedly makes more than $13 million a year for hosting First Take, among many other roles. “Now, I doubt that. But it’s possible. No one knows.”

At the time of last month’s earnings report, Iger said $1 billion of the cost savings target was under way. A month later, during an appearance at a Morgan Stanley conference, he identified one specific area of overlap created under former CEO Bob Chapek. The marketing of streaming services, he said, had become “disconnected” from the marketing of individual series or movies. “That needed to be put back together, not just because – for sanity purposes, but also because there are opportunities to reduce expenses,” he said.

Disney is far from alone in paring back. Media and tech companies have laid off thousands of workers during recent turbulent months, with spiking interest rates and foreign currency gyrations among the economic headwinds.

Investors initially cheered Iger’s revelation about streamlining, boosting shares, but the stock has fallen back in recent weeks. It closed Tuesday at $96.54 and has risen about 2% in 2023 to date. Even so, shares now are not much higher than where they crash-landed in March 2020. That was just after Iger passed the CEO baton to Bob Chapek and Covid was beginning to lay siege to almost all of Disney’s operations.

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