Little did Walt Disney Co. (NYSE: DIS) workers know that when once and future CEO Bob Iger returned to the entertainment company, he would savage the workforce. He did, as he announced the layoff of 7,000 workers, many of them in the corporation’s media and studio businesses. (These industries are laying off the most workers.)
Iger was supposed to save Disney from bumbling CEO Bob Chapek, who was chief executive for less than two years. Under his management, Disney lost billions of dollars on its streaming business, which included Disney+. The service actually was launched by Iger, who priced it below market, presumably to pick up subscribers.
Chapek also angered Disney’s old guard, partially in its entertainment divisions. Now, those divisions get to carry the brunt of his downsizing.
Iger told staff, “The difficult reality of many colleagues and friends leaving Disney is not something we take lightly.” He did not take a pay cut in the process or lay himself off. Rather, he disappointed thousands of people who believed he could make Disney successful again, at least by their standards and those of shareholders.
Shareholders were having none of it. Disney’s stock is down 3% over the past six months, while the market is up 7%. The streaming business has stopped its subscriber hypergrowth. Disney is in the midst of raising prices.
One of Iger’s primary blunders was that he thought he could buy his way into a market controlled by Amazon and Netflix. He thought Disney, Pixar, Marvel and Star Wars offered a compelling enough lineup to draw customers. He was right about drawing but wrong about prices.
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