Walt Disney Co. (NYSE: DIS) has started another round of layoffs. The architect is Bob Iger, the long-time CEO who came back to run Disney when it became troubled under his replacement Bob Chapek. The board’s decision was a poor one. Disney’s shares are off 15% in the past year. Investors want more than cost cuts. (These companies are planning the biggest mass layoffs this year.)
Iger recently announced 7,000 layoffs. The pattern of those let go seems chaotic. People have been fired from ESPN, the entertainment group, theme parks, and the Experience and Products division. Surely, some of these units are doing well enough to remain fully staffed.
Disney’s problems predate Chapek. Among the largest was the initial low price of the streaming service Disney+. The price was meant to pick up market share. The number did surge to 162 million. However, the division that operates the service lost billions of dollars.
Iger is trapped in an old media model. The theme parts are not part of it. However, TV content and streaming are each highly competitive TV relies on a difficult ad market. Streaming businesses are up against giants Amazon and Netflix. Additionally, a small army of new streaming services has been revamped or come online in the past several years. People will only subscribe to so many streaming services a year.
Iger is supposed to be Disney’s savior. However, many who expected to be saved have lost their jobs or will soon. Iger’s playbook is an old one. If revenue is not rising fast enough, cut costs. It is not novel, but sometimes it works. Don’t let the door hit you on the way out.
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