Disney is targeting a multi-billion figure for content savings over the next few years, excluding sports, CEO Bob Iger announced Wednesday.
This will be an annualized savings target of $3 billion of future spending, CFO Christine McCarthy clarified. Disney still expects its content spending to remain “in the low $30 billion range” for fiscal 2023.
As for how Disney will achieve these savings, Iger outlined a strategy of “better curation” for its general entertainment content, both in terms of costs and the volume of content.
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“We are going to take a really hard look at the cost for everything that we make, both across television and film. Because things in a very competitive world have just simply gotten more expensive, and that’s something that is already underway here. In addition, we’re going to look at the volume of what we make. And with that in mind, we’re going to be fairly aggressive at better curation when it comes to general entertainment,” Iger said when asked about the savings on the earnings call.
He added that the restructuring of the company, which will see the company reorganized around three divisions (Disney Entertainment, which will include the film and TV assets, as well as Disney+; ESPN, which will include ESPN and ESPN+; and Parks, Experiences and Products), should help in deciding how to cut costs.
“In addition, the structure is now designed to place responsibility of all international programming and investment in content in the hands of one unit, so that they can better decide the balance between what we make for global distribution and consumption and what we make for local distribution and consumption, with an eye toward possibly reducing expenses there as well,” Iger said.
Iger added that licensing content will also be part of the company’s plan to achieve cost-savings, though he said he’s not sure how big a component it will be. This would be a marked change from the strategy the company began with the launch of Disney+ in 2019, at which time the company began keeping more of its content in-house and largely stopped licensing out programming in order to house that content on its own services.
The media and entertainment giant also said it is targeting $5.5 billion in cost savings, including $2.5 billion in non-content costs, as the company looks to restructure and rationalize costs.
The changes come as Iger works to stem Disney’s streaming losses, with the company targeting profitability for that sector in fiscal 2024. (In the company’s first-quarter earnings report, Disney increased its operating loss for the segment, growing to $0.5 billion to $1.1 billion, alongside largely flat U.S. subscriber numbers).
“Now it’s time for another transformation; one that rationalizes our enviable streaming business, and puts it on a path to sustain growth and profitability, while also reducing expenses to improve margins and returns, and better positioning us to whether future disruption, increased competition, and global economic challenges,” Iger said, after speaking about his tenure at the company.
