Walt Disney Co said on Wednesday it would lay off 7,000 employees as it tries to trim costs amid souring economic conditions. The job cuts, announced by CEO Bob Iger, aims to save $5.5 billion in costs for the entertainment giant.
Disney has as many as 190,000 people on its rolls as of 2021 annual report, and the current round of layoff means 3.6 percent of Disney's global workforce will leave the company.
"I do not make this decision lightly. I have enormous respect and appreciation for the talent and dedication of our employees worldwide," Iger said during an earnings call.
Disney shares rose 4.7 percent to $117.22 in after-hours trading as investors factored in the cost cutting measures. Disney's net income in the first quarter came in at $1.279 billion and revenue hit $23.512 billion, which was better than Street estimates of $23.4 billion.
Disney's adjusted earnings per share was 99 cents, which beat the average analyst estimate of 78 cents, according to Refinitiv.
Iger also unveiled a plan to restructure the sprawling empire into three segments -- film, television and streaming; sports unit focusing on ESPN and Disney parks, experiences and products. "This reorganization will result in a more cost-effective, coordinated approach to our operations .... We are committed to running efficiently, especially in a challenging environment," Iger said.
Meanwhile, Disney reported a slight decrease in subscriber numbers in the latest quarter. Subscribers to Disney+ dropped one percent to 168.1 million as of December 31. However, analysts had expected this decline.
Back in November, there were reports that Disney was putting in place a hiring freeze and was even considering layoffs as it faced a slowing of revenue growth. According to an internal leaked memo from the CEO, the company was "limiting headcount additions through a targeted hiring freeze".
"Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold. Your segment leaders and HR teams have more specific details on how this will apply to your teams", the memo said.
Global revenues for The Walt Disney Company decreased 18 per cent to $1.1 billion and operating income dropped 18 per cent to $0.1 billion, owing to a decrease in advertising revenue due to lower average viewership, especially in India where there was no cricket in the September quarter, the report had said at that time.