Disney's Bob Iger will lay off 7,000 workers
Disney’s Bob Iger is planning to lay off 7,000 employees in a ‘significant transformation’ to cut back costs as he eliminates some of his predecessor’s efforts.
On Wednesday, Iger announced his plans to restructure the company, effectively eliminating the Disney Media and Entertainment Distribution group set up under former CEO Bob Chapek.
The new structure, according to the , will have only three divisions, Disney Entertainment — which will include film and TV assets as well as Disney+; ESPN — which will include ESPN and ESPN+; and Parks, Experiences and Products — which will include theme parks and the consumer products team.
As part of that changeup, Disney will cut 7,000 jobs — representing a little over three percent of its global workforce.The cuts are likely to predominantly affect the entertainment and ESPN divisions, despite the company beating analyst’s expectations for the fourth quarter of 2022.
The changeup comes as Gov.Ron DeSantis and the company faces a proxy battle with an activist investor seeking to gain a seat on the board.
Disney CEO Bob Iger is planning to lay off some 7,000 employees as he restructures the company
In announcing the new structure Wednesday, Iger likened it to changes he made at the media giant in 2005, when he first became CEO, and in 2016, when Disney announced a shift to streaming as it bolstered its assets with the acquisition of 21st Century Fox.
‘Our new structure is aimed at returning greater authority to our creative leaders and making them accountable for how their content performs financially,’ he said on an earnings call.
‘Our former structure severed that link and must be restored,’ he continued, noting: ‘Moving forward, our creative teams will determine what content we’re making, how it’s distributed and monetized and how it gets marketed.’
Under the plans, Alex Bergman and Dana Walden will co-chair the Disney Entertainment division, with Jimmy Pitaro continuing to lead ESPN and Josh D’Amaro continuing to lead parks and experiences.
And, in addition to the planned layoffs, Disney CFO Christine McCarthy also said the company is targeting $5. Here is more information in regards to eVDeN EVe naKLiYat look at our website. 5billion in cost savings, including $3billion related to future content savings with the remaining $2.5billion coming from existing marketing, staffing and technology costs.
But the move comes as Disney beat earnings expectations.
The company announced on Wednesday that it earned $1.28billion, or 70 cents per share, in the three months through December 31, up from a net income of $1.1billion, or 60 cents per share a year earlier.
Excluding one-time items, Disney earned 99 cents per share.Analysts, on average, were expecting adjusted earnings of 78 cents per share, according to FactSet.
In total, revenue grew eight percent to $23.51 billion from $21.82 billion a year earlier. Analysts were expecting revenue of just $23.44 billion.
The company also said Disney+ ended the quarter with 161.8million subscribers, down one percent since October 1, while Hulu and ESPN+ each posted a two percent increase in paid subscribers.
Following the news, shares of Disney rose three percent in after-hours trading.
Much of the layoffs are expected to be in the entertainment division, which includes Disney+, as well as ESPN, which includes ESPN+
Disney ended the fourth quarter of 2022 with $1.28billion, or 70 cents per share
Disney shares ticked upwards following the earnings call on Wednesday
But Disney has been under fire recently by billionaire investor Nelson Peltz, who has claimed Iger is not fit to lead the company, citing falling revenues.
Last week, Peltz — the founder of Trian Management — sent a letter to Disney shareholders on Thursday asking them to vote for him rather than longtime board member Michael BG Froman.
It was just the latest move Peltz made in his ongoing war with Disney, after previously filing paperwork with the United States Securities and Exchange Commission for a seat at the Mickey Mouse table and laun
Trying to win over the shareholders, Peltz — who is worth $1.4billion and currently owns 0.5 percent of Disney through his firm Trian Partners — writes that ‘earnings per share have declined an astounding 50 percent since 2019 because costs have ballooned, even as Disney generated 41 percent more in revenue.’
At the same time, he said, the share price has plummeted 44 percent in 2022.
‘For a company with so many advantages — unparalleled consumer loyalty and access, valuable intellectual property, renowned brands, an enviable library of content and a talented and engaged workforce — it is disappointing and simply unacceptable that shareholders have suffered so much,’ he said.
‘We cannot sit idly by,’ the letter continues. ‘And we hope you will not either.
‘If shareholders like us and you remain passive, without demanding more accountability and an ownership mentality in the boardroom, why shouldn’t we expect the stock to do anything other than fall back to another eight-year-low?
‘As the owners of this great company, we must act,’ it says, before touting Peltz’s work at other companies including Unilever, Procter & Gamble and Wendy’s.
‘Nelson is prepared to ask the hard questions at Disney and pursue excellence in strategy, leadership, culture and performance,’ the letter continues, claiming: ‘Disney’s executives and directors do not want Nelson in the boardroom.
‘Based on our experience, we believe they don’tt want to be challenged, answer hard questions or have robust debates. They prefer the status quo.
‘But shareholders need someone in the boardroom who is experienced enough, committed enough and objective enough to insist that Disney live up to its full potential,’ the letter concludes.
‘The current Disney directors wake up with challenging day jobs: building cars, selling clothing, processing credit card transactions, sequencing genes. All important things.
‘But these accomplished directors are busy, and we believe they cannot possibly focus sufficiently on Disney to ensure that 2023 and 2024 are nothing like 2022. If they could, 2022 would not have been like 2022.’
The letter then goes in for the kill — asking shareholders to vote for him and withhold votes for Froman.
‘As an experienced outsider and independent voice, Nelson Peltz will seek to work with the rest of the Disney board to have Disney use its famed imagination to create a better tomorrow for Disney shareholders.
‘Together, we can Restore the Magic.’
Billionaire investor Nelson Peltz (pictured in October) sent an open letter to Disney shareholders last week in his ongoing efforts to get a seat on the board
Peltz asked shareholders to vote for him instead of longtime board member Mike Froman (pictured in May)
In response to the letter, Disney issued a statement saying: ‘The Disney Board of Directors is focused on delivering long-term sustainable value and continually works to ensure it is comprised of the right mix of experience, skills and perspectives to guide Disney, particularly as it navigates this dynamic period.
‘The Disney Board of Directors does not endorse Nelson Peltz (or his son Matthew, who is running as an alternate Mr. Peltz may swap in) as a nominee, and believes the election of either Mr. Peltz or his son would threaten the strategic management of Disney during a period of important change in the media landscape.
‘Inexplicably, Trian seeks to replace Michael Froman, a highly valued member of the Board with deep background in global trade and international business, who the Board believes is far better qualified than either Mr. Peltz or his son to help drive value for shareholders,’ the executives said in an email to DailyMail.com.
‘Neither Mr. Peltz nor eVDEN eVE nAKliYaT his son offer skills or experience additive to the Disney Board that replace the decades-long experience of Mr. Froman.’
The company also sent out its own letter to shareholders urging them not to vote for Peltz.
It says: ‘Your Board is committed to delivering sustainable, superior shareholder value. Over the last several years, we have focused on ensuring that the Board has the right combination of experience, skills and perspectives to guide Disney through a period of unprecedented change in the media business.’
The letter noted that Parker will become the chairman of the board following the 2023 shareholder meeting and says: ‘ Your Board does not endorse Mr. Peltz (or his son) as a nominee and believes that his election would threaten our efforts to manage Disney for all shareholders.
‘Over more than six months of engagement with Mr. Peltz, in both conversations and EVdEN evE NAKLiYat written materials, he has demonstrated that he does not understand Disney’s businesses and he lacks the perspective and experience to contribute to the objective of delivering shareholder value in a rapidly shifting media ecosystem.’
The letter concludes: ‘We look forward to providing you with more information regarding the Board and management team’s strategy to deliver shareholder value in today’s rapidly shifting media ecosystem and the reasons why the election of Mr. Peltz will not benefit that plan.
‘In the interim, we strongly urge you to simply discard and NOT to vote using any blue proxy card sent to you by the Trian Group. Please wait to vote until you can do so on a fully informed basis.’
Florida Gov. Ron DeSantis announced on Monday he is seizing control of Disney’s special tax district
Meanwhile, Florida Gov. Ron DeSantis has seized control of Disney’s formerly self-governing district in Florida and announced on Monday that the company must repay $700 million in debt and begin paying taxes.
The Florida governor took control of the five-member Reedy Creek Improvement District board, which oversees nearly 40 square miles of central Florida, on which the Walt Disney World Resort is built.
Considering most of the land within the special district is owned by Disney and its affiliates, the company has been given an unprecedented power since 1967 to determine how the area is run — essentially allowing the Wald Disney Co. to operate as its own form of government.
‘Disney’s going to pay its debt,’ DeSantis assured during a press conference on Wednesday morning.
‘What I said really for the last six, nine months is: Disney is no longer going to have self-government. They’re not going to have their own government. Disney is gonna pay their fair share of taxes and honor their debts. And that’s exactly what this proposed piece of legislation will do.’
He then went on to blast critics, saying: ‘A lot of folks in the media were saying that, “Oh my gosh, Disney’s actually going to pay less taxes and Floridians are going to pay more taxes.” They were saying that. And I’m like, “You’ve got to be kidding me.”‘
‘Well, this puts that to bed and so those debts will be honored,’ he continued.
‘This is now obviously going to be controlled by the state of Florida. There’s a new sheriff in town.’
Reedy Creek owes $700 million in debt to Florida due to it’s 56 years as a tax exempt district governed entirely b y Disney’s five-member board
A new bill would give the governor full control over the district, and the ability to appoint the five-member board of supervisors that run the special district. The nominees would then need to be confirmed by Florida state senators.
The proposed legislation would prevent anyone who has ties to the theme park from serving on the new board, while keeping in place its obligation to pay almost $1billion in outstanding bonds.
It would also term-limit board members and put the governor in charge of nominating members – as well as allowing Florida to impose taxes and laws on Disney and the district its resort encompasses.
Additionally, the bill would ensure Disney is held responsible for paying more than $700 million in unsecured debts and makes sure that doesn’t fall on Florida taxpayers.
‘These actions ensure a state-controlled district accountable to the people instead of a corporate-controlled kingdom,’ DeSantis’ deputy press secretary Jeremy Redfern told DailyMail.com
If approved, the legislation would permanently eliminate Disney’s ability to self-govern the area spanning Orange and Osceola counties in Florida.
And the Reedy Creek Improvement District will be renamed the Central Florida Tourism Oversight District.
Walt Disney World president Jeff Vahle released a statement on the proposed legislation, saying the company is ‘monitoring the progression’ of the legislation.
‘Disney works under a number of different models and jurisdictions around the world, and regardless of the outcome, we remain committed to providing the highest quality experience for the millions of guests who visit each year.’