Amid the impact of the coronavirus pandemic, Disney has been affected in many ways, including the closure of many venues and the cessation of sporting events. As a result, the company has been taking cost-cutting measures to help stabilise its earnings. As part of the measures, the company has been reducing its workforce, with a third and final round of layoffs set to begin before the summer.
Reports suggest that the layoffs will not target any specific division of the company, but reportedly, marketing and headcount reductions at Disney Media and Entertainment Distribution are expected to make up the bulk of the efficiencies. The first round of layoffs was confirmed in March by CEO Bob Iger, and around 4,000 employees were affected. The number of workforce reductions planned for all three rounds is around 7,000.
Disney’s Parks, Experiences and Products, as well as ESPN, have been particularly hard hit by the pandemic. Other measures taken by Disney include increasing content costs to slash $5.5 billion, cutting $3 billion in content costs, and taking a content impairment charge between $1.5 billion and $1.8 billion. Additionally, the company cancelled the construction of a $900 million corporate campus in Florida.
Disney’s success in the streaming world has also taken a hit, as 4 million subscribers cancelled their Disney+ subscriptions in Q2 following recent price hikes. The company’s streaming losses narrowed to $659 million from a loss of $887 million in the previous year.
The impact of the pandemic has forced companies from various industries to take cost-cutting measures to keep their financials stable. In the case of Disney, the company’s losses, particularly in its Park and Resort divisions, have been devastating.
The struggling company has also been pitted against LA’s Writer’s Guild strike, which has halted new TV and film production, and the austerity measures taken by many other companies from different sectors to cut costs. Other tech firms, such as Amazon and Meta, have also cut thousands from their workforces as they try to save costs and ride out the economic challenges of the pandemic.
In the memo to the employees, Bob Iger acknowledged that the situation was not an easy one, stating that many colleagues and friends will be affected by the final round of layoffs. He expressed his gratitude and appreciation for their hard work and devotion to the company, despite the unfortunate outcome.
Disney’s recent financial statement showed revenue of $21.82 billion and net income of $1.27 billion, demonstrating that the company is now faced with a struggle to keep afloat in the face of the pandemic and other economic challenges.
In conclusion, Disney continues to feel the impact of the coronavirus pandemic, with the company taking measures to reduce its workforce and costs to help stabilise its earnings. The third and final round of layoffs is set to begin before the summer, impacting marketing and headcount reductions at Disney Media and Entertainment Distribution. Unfortunately, the company has faced several challenges, including the tremendous impact on its Parks and Resort division, the strike by LA’s Writer’s Guild and the austerity measures many companies from different sectors have taken to cut costs. With the outbreak of the pandemic continuing and with the future uncertain, it is unclear how the situation will pan out for Disney, and what changes the company will have to make to survive this challenging period.
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