Disney announced the layoff of 7,000 employees on Wednesday, in CEO Bob Iger’s first major decision since being called back to lead the company late last year.
According to NDTV, the layoffs follow similar decisions by US IT giants, which have laid off thousands of staff as the economy worsens and companies reduce a recruitment drive that began during the height of the pandemic.
“I do not make this decision lightly. I have enormous respect and appreciation for the talent and dedication of our employees worldwide,” Iger said on a call to analysts after Disney posted its latest quarterly earnings.
According to their annual report for 2021, the company employed 190,000 people globally as of October 2, that year, with 80 percent of them working full-time.
Last quarter, the famous firm created by Walt Disney witnessed its first-ever drop in subscribers as customers cut down on their spending.
Subscribers to Disney+, Netflix’s streaming competitor, declined 1% to 168.1 million on December 31, compared to the previous three months.
Analysts had widely expected the drop, and the Disney stock price stayed 8% higher in post-session trading.
Disney’s lower-than-expected operational losses for its streaming services of $1 billion from October to December calmed investors.
The Disney Group’s revenue for the three-month period was $23.5 billion, which was higher than analysts had predicted.
Iger, who stood down as CEO in 2020 after nearly two decades in charge, was restored after the board of directors fired his replacement, Bob Chapek. It was unhappy with his ability to manage costs.
Chapek was also singled out for concentrating power in the hands of a small group of executives who made key content choices despite having no Hollywood experience.
Iger’s new tenure as CEO is facing significant challenges, including a campaign by activist investor Nelson Petz, who is demanding significant cost cuts after alleging that Disney overpaid for the purchase of the 20th Century Fox movie studio.
Disney is also engaged in a feud with Florida governor Ron DeSantis, who wants to reclaim control of the territory around Walt Disney World that has been under Disney’s control until now.
DeSantis, a political conservative who has been mentioned as a prospective US presidential candidate, is enraged with Disney for opposing a state law that bans school lessons on sexual orientation.
Disney+‘s difficulties come as its archrival Netflix has risen from its own downturn and announced a significant increase in new customers at the end of last year.
Netflix has started a campaign to stop password sharing among its hundreds of millions of global members as part of its own expense efforts.
Netflix said on Wednesday that it has started to crack down on password sharing in Canada, New Zealand, Portugal, and Spain, as it continues to apply its new policy worldwide.