Disney is planning to reorganize into three separate divisions -- Disney Entertainment (streaming/media operations), ESPN Division(TV network/ESPN+), and a Parks, Experiences, and Products unit. Although their reconstruction of their company is attempting to cut costs, it is at the expense of thousands of jobs. These changes were made shortly after Disney posted its most recent quarterly earnings. Since those earnings were posted, Disney announced that it would be cutting $5.5 billion dollar in costs. $3 billion dollars in costs would be cut from content excluding sports and $2.5 billion would be cut from non-content cuts. The company also said it would be eliminating 7,000 jobs from their workforce which is about 3% of its total 220,000 workers.
https://www.cnbc.com/2023/02/08/disney-reorganization.html?recirc=taboolainternal
4 comments:
This was a very informative article on how Disney is looking to move forward financially. As someone who has invested and keeps up with Disney seeing how heavily they are cutting costs is very helpful in making future decisions regarding the company. Along with that, I found it interesting how many workers they are cutting. Despite them having so many 7000 jobs is still a lot and cutting all of them seems somewhat excessive in their restructuring but I guess we will see how it ends up in the coming months.
The reorganization plan from Disney can have a bilateral effect. The positive effect of restructuring non-content sports and cuts will give them freedom and decrease costs by 5.5 billion dollars. However, Laying off employees (about 3% of the whole company) can have a significant negative effect on customer retention. When a company lays off its employees it sends out a message to customers that it is undergoing some sort of crisis. This can be an issue for Disney that might arise. Massive layoffs can damage the company's culture and morale and might impact a company's ability to attract and retain good employees. If a company is already understaffed, cost-cutting layoffs can lead to burnout and other staffing issues.
Disney is one of the many companies that seems to have taken advantage of the pandemic but has grown too fast for their own good. Many other companies grew too fast and had to cut a lot of jobs within the past few months. These companies made the most of the pandemic but overdid it and left them struggling to handle their own growth, so these companies have to slash costs and jobs. I believe one of the only big companies that didn't make the mistake of growing too quickly was Apple.
I think this could be very concerning if other companies decide to cut costs as well. We have already seen the impact of tech industry layoffs. Many firms are deciding to implement layoffs in hopes to cut costs in hopes to reverse their overexpansion during the pandemic. If other companies follow suit, it could be very concerning and result in greater unemployment.
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