Disney plans to cut 7,000 jobs in cost-saving strategy, brand restructuring
Yahoo Finance Live's Pras Subramanian and Dave Briggs break down some of the early takeaways from Disney's earnings call, including job cuts and restructuring in the company's subsidiary brands like ESPN and Hulu.
DAVE BRIGGS: All right. We're getting some headlines from the Disney investor call. Cost-cutting is the theme, and you can see investors reacting to it with shares up more than 8%. Disney is looking to find $5.5 billion in cost savings and will be cutting 7,000 jobs to help do so. CEO Bob Iger also announcing the company is going to restructure into three units, and here's the key-- Disney Entertainment, ESPN, and Disney Parks, Experiences and Products.
Pras, what's your reaction?
PRAS SUBRAMANIAN: A lot to parse there, right, Dave? You know, so you're hearing about those cuts. $3 billion coming from content alone, but they're not touching sports, right? They're not touching sports. They're leaving that alone. Loving 7,000 job layoffs. It's hard to say that, but it's true-- it is going to be a big cost driver for the company.
And then also talking about ESPN, now its own separate unit, right? So what does that mean for the company? Does it make it easier to maybe spin off? Is it easier to account for? Is it easier to kind of separate a sort of still growing or still sort of very valuable property for them? So I think this is sort of Iger putting a stamp on things right now, and this is what he's doing.
DAVE BRIGGS: Yeah, 7,000 cuts. That's about 3% roughly of their 220,000 employee worldwide headcount, so not a significant number to the likes of some of those we've seen in the tech sector, in terms of 8%. And so, theoretically, without hearing from Bob yet, presumably, these are high-priced. Probably some executives are going to roll here, not the people that are dressing up as characters. Because they're going to have to spend a lot on this labor agreement. 96% of the employees turned down their recent proposal. So they're going to have to really spend up on those employees.
I don't think ESPN'S going anywhere. I really do not. Hulu is the big question. Will they buy out the remainder of it? I'm gonna go yes. What else do you think might happen today?
PRAS SUBRAMANIAN: That's a big point. Rich Greenfield talking about how he might address that big Hulu question mark. What's happening? What's the future of that? Do they even need it when they have Disney+, right?
Absolutely right about the parks business, having to renegotiate sort of labor contracts there. It's a booming business. They want to get that addressed. They want to lock that down, get those costs under control, and potentially kind of have some forward see-through there where they can actually keep it kind of constant.
Yeah, ESPN, this is the big debate, right? Where is that gonna go? And I think you make a big point. It's a valuable property. Maybe Disney wants to hang on to that and then kind of connect with ABC networks, right? So I think that's all part of the whole genesis, this whole part of the-- all the parts coming together for Disney. And we'll see what Bob Iger says later today.
DAVE BRIGGS: Good to have parks when they're up 20-plus percent year over year.