Disney (DIS) is reportedly planning thousands of job cuts next week, which will include slashing 15% of its entertainment division.
According to Bloomberg, the cuts will impact several areas within the entertainment division such as TV, film, theme parks and corporate teams. Every region Disney operates will be affected, with impacted personnel notified as early as April 24, the report noted.
Separately, CNBC reported Wednesday afternoon that ESPN will begin layoffs early next week. Yahoo Finance reached out to Disney for comment on both reports but did not immediately hear back.
Disney chief Bob Iger, who stepped back into the CEO position in November, has remained hyper-focused on profitability as investors shift focus away from subscriber growth. The company’s direct-to-consumer division shed a whopping $4 billion-plus in its fiscal 2022 ended on Oct. 1, after it spent an estimated $33 billion on content last year.
Since then, Iger has stressed a direct link between content decisions and financial performance, especially amid a challenging macroeconomic environment that’s pressured other media giants — like Warner Bros. Discovery (WBD) and Paramount Global (PARA) — to enact their own cost-saving initiatives.
Disney stock, mirroring the broader markets, dipped Wednesday afternoon on the heels of the news, with shares down about 2%. Shares also fell late Tuesday following Netflix’s mixed earnings results in which the streaming giant missed Wall Street subscriber estimates.
Disney had previously announced an effort to slash 7,000 jobs as it looks to eliminate $5.5 billion in costs. The company went through its first round of layoffs at the end of March with more job cuts expected before the start of the summer to complete the 7,000-job target.
In addition to the layoffs announced in February, Disney also disclosed plans to restructure the organization into three core business segments: Disney Entertainment, ESPN, and Disney Parks, Experiences and Products.
At the time, Iger said the new strategic organization, “will result in a more cost-effective coordinated and streamlined approach to our operations.”
“We expect cost reduction initiatives to really start to kick in during the June and Sept quarters, driving loss improvement in Streaming and smaller [year-over-year operating income] declines in Linear Networks,” Deutsche Bank said in a new note on Tuesday, reiterating its Buy rating on the stock.
The bank, especially bullish on Disney’s theme parks division and upcoming film slate, sees an “attractive setup” for shares in the back half of this year, writing: “DIS’s [fiscal third quarter] will be an earnings inflection point as the company flips from three consecutive quarters of earnings declines back to sustained positive earnings growth.”
Disney is set to report its fiscal second quarter earnings results on May 10.
