Yahoo Finance entertainment reporter Allie Canal breaks down Disney CEO Bob Iger's latest memo to Disney staff outlining imminent job cuts in the first half of 2023.
Video Transcript
- We got to start with the latest developments out of Disney. CEO Bob Iger announcing the start of mass layoffs this week. The company is cutting a total of 7,000 workers as it looks to $5 and 1/2 billion in costs. Yahoo Finance's Alexandra Canal following this story for us. And Ali, what do we know about this first round of layoffs?
ALEXANDRA CANAL: So we already knew that these layoffs were coming. This was announced when Disney announced earnings on February 8, which is why I don't think we saw an immediate reaction to the stock price. But shares are moving a bit higher right now, up about 2%. Now, we did receive an internal memo from Bob Iger. Yahoo Finance obtained that. And we know that there will be three rounds to these cuts.
The first round happening this week, the week of March 27. Second round will be in April. And the third round will be before the beginning of the summer. So by the summer, 7,000 jobs will be eliminated. Now, Iger did warn that for the employees still present at the company, well, there are going to be a lot of challenges ahead.
He wrote in part, quote, "for our employees who aren't impacted, I want to acknowledge that there will no doubt be challenges ahead as we continue building the structure and functions that will enable us to be successful moving forward. I ask for your continued understanding and collaboration during this time." So a turbulent period overall for this company.
And let's not forget in addition to these layoffs, Disney also restructured the business into three separate units. Entertainment. ESPN. Parks. So when Disney does report earnings next quarter, we will see all three of those segments split. And we will be receiving the details when it comes to revenue subscribers, which I do think analysts and investors alike are really curious about, especially with ESPN and how sports rights has just ballooned.
- Yeah. I couldn't agree with that more. I really want to get a glimpse, being a sports fan, of just how much they are contributing to the bottom line there. Obviously, parks we know is. But ESPN needs to be separated to get a better look under the hood. And I can tell you, everyone over at ESPN walking on eggshells, just wondering who's going to be next. It's a very tough time because they've been through this before. The whole media sector really is going through a tumultuous time, to use your words. Who else is undergoing a similar transition? And what does it tell us about the year ahead?
ALEXANDRA CANAL: We've really seen this across the board. Paramount restructuring its business to combo with Showtime. Warner Brothers Discovery. That is a business that's dealt with multiple merger-related challenges. But in the latest earnings report, CEO David Zaslav said that the bulk of their restructuring is behind them. We've seen Netflix roll out several revenue initiatives like its crackdown on password sharing, ad supported.
So this is something that all media companies are leaning into right now, this promise that better days are ahead in 2023, that we're going to be seeing these peak losses. And that's because of these layoffs. That's because of these restructuring efforts. So that is really the vibe right now on Wall Street within the media landscape. And this comes after 2022. The stock market wiped $500 billion off of the top media and entertainment companies.
So we've really entered this year kind of not knowing where the future of media would be heading. So all of these CEOs just came out guns high saying, this is what we need to do moving forward in order to most appease our shareholders and in order to re-instill that investor confidence.
- And is it headed to big tech? Because we've talked about this. Amazon and Apple both spending a billion dollars on movies, both spending on sports, both spending on streaming. So an interesting transitional year. Ali, thanks. We'll see you in just a little bit.