With CEO Bob Iger back at the helm, the new organizational structure of The Walt Disney Co. is taking shape, with 7,000 layoffs planned.
On Wednesday, the executive outlined his plan to swiftly restructure the company, effectively dismantling the Disney Media and Entertainment Distribution group created by former CEO Bob Chapek in 2020.
The new structure will have 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, which will include the theme parks and consumer products teams.
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Alan 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.
On Disney’s earnings call, Iger likened the changes he will pursue as akin to the ones he made in 2005 when he first became CEO, and in 2016, when Disney announced a shift to streaming, looking to Fox’s entertainment assets to bolster its business, touting Fox’s library and management team as key assets.
“Our new structure is aimed at returning greater authority to our creative leaders and making them accountable for how their content performs financially,” Iger said. “Our former structure severed that link and must be restored. Moving forward, our creative teams will determine what content we’re making, how it is distributed and monetized, and how it gets marketed.”
Disney plans to cut 7,000 jobs as part of its restructuring, which would represent a bit more than 3 percent of the company’s global workforce. However, with theme park staff making up a significant portion of Disney employees (and with that division not seeing the same level of restructuring as other departments), the cuts are likely to be steeper in the entertainment and ESPN divisions.
Disney CFO Christine McCarthy also said that the company is targeting $5.5 billion in cost savings, including $3 billion related to future content savings, with the remaining $2.5 billion from other costs like marketing, staffing or technology.
In his first action after making a surprise return to the chief executive’s desk in November, Iger ousted Chapek lieutenant and DMED chief Kareem Daniel. At the time, Iger told staff that he had tasked a group of top executives that would create “a new structure that puts more decision-making back in the hands of our creative teams and rationalizes costs.
“Without question, elements of DMED will remain, but I fundamentally believe that storytelling is what fuels this company, and it belongs at the center of how we organize our businesses,” he added.
The new structure provides more detail for that vision, with Iger saying that it will put creativity at the core of the business, with each division leader overseeing their own P&L lines.
The reorg plan comes as Disney delivers a critical earnings report, its first since Iger returned.
Wall Street is looking to Iger to lay out a strategy for the company’s larger streaming ambitions and its plan to improve profitability. At the same time, Iger warned after he left the CEO chair that linear TV was nearing a precipice, but he now finds himself running a company with a pair of critical assets (ESPN and ABC) that are tightly aligned with the linear TV bundle, leaving some to wonder whether Disney would sell them, or milk their profits for as long as possible.
And then there’s Hulu, with questions about whether Disney will follow through on its deal to acquire Comcast’s remaining stake, or seek to offload that platform as well to focus on Disney+.
All of this is happening while Disney faces a proxy battle with the activist investor Nelson Peltz, who is seeking a seat on the company’s board. Peltz, an investor and friend of Disney employee and fellow Palm Beach billionaire Ike Perlmutter, has taken aim at Iger and the board’s dealmaking and failure to find a successor to Iger.
Iger also teased that more installments are in the works for Toy Story, Frozen and Zootopia. On an earnings call Wednesday, Iger told investors these future films are an example of how “we are leaning into our unrivaled brands.”
