Looks Like Iger Has a Plan - It Includes Job Cuts

[BrightMorningStar]

https://www.zerohedge.com/markets/d...st-savings-after-disappointing-streaming-subs

Disney Stock Soars On Job Cuts, Cost Savings After Disappointing Streaming Subs​

Out of the gate, Disney looked good with a top- and bottom-line beat:

• 1Q Rev. $23.51B, Est. $23.39B
• 1Q Adj EPS 99c, Est. 74c

With the Parks segment revenues beating expectations ($8.74bn vs $8.08bn est).


However, Disney's streaming (direct-to-consumer) business lost $1.1 billion in the quarter (less than the previous quarter, when it lost $1.5 billion) but all the segments disappointed in terms of subscribers, with overall streaming growth largely stalled domestically. Disney+ had just 200,000 new customers in the US and Canada last quarter. ESPN+ and Hulu, which are US-focused services, saw just a 2% increase in their subscribers.

• Disney 1Q Disney+ Subscribers 161.8M, Est. 164M
• 1Q ESPN+ Subscribers 24.9M, Est. 25.7M
• 1Q Total Hulu Subscribers 48.0M, Est. 49M
• 1Q Hulu & Live TV Subscribers 4.5M, Est. 4.6M

Disney+ posted a rare loss of subscribers in the quarter, shedding more than two million customers compared to the previous quarter. Most of the decline came from Hotstar, which recently lost the broadcast rights to Indian cricket. Disney+ now has 162 million subscribers.



The initial gains in the stock after hours evaporated on the disappointing sub growth (or shrinkage), but then came the conference call...

CEO Bob Iger says “we are embarking on a significant transformation” and said he plans “to reshape our company around creativity, while reducing expenses.”

This “will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders.”

Iger says the company will now have three core business segments:

• Disney Entertainment,
• ESPN, and
• Disney Parks Experiences and Products.

But the big news is that Iger announced Disney would cut 7,000 jobs in the restructuring with plans to seek $5.5 billion in cost savings.

The reductions include lower spending on programming and $2.5 billion in non-content related cuts.

About $1 billion of the savings are already underway, Iger said on a conference call with investors Wednesday.

The reorganization is intended to improve profit margins, Iger said, and represents his third major transformation of the business following efforts to beef up its film franchises through acquisitions and the development of its online business.

Additionally, Iger maintains Disney+ profitability goal for end of fiscal year 2024.

Iger says the company will ask the board to reinstate the dividend by the end of the calendar year, saying the impacts from the pandemic are fading.

He says Disney’s cost-cutting initiatives will make this possible.

All of which sent the stock soaring...



Finally, we note that Disney will no longer provide long-term subscriber guidance “to move beyond short-term quarterly metrics” and focus on profitability, Iger says.

 

[Miffy]

Note on Hulu. I had unsubscribed last year after I used up the content I wanted to see but got an offer sometime in December--a year of Hulu with ads for $1.99/month--so I took it. If there are a lot of Hulu subscribers like me, they're not exactly raking it in there.

 

[ElyseInWonderland]

I'm not going to start screaming "DISNEY IS IN TROUBLE", but I *do* think the tide is turning regarding their stronghold on entertainment and parks. The writing is on the wall: layoffs are happening, D+ isn't making money like it should, the parks are charging more for less on a system that is overwrought and confusing... Universal is capitalizing on this in a big way.

Disney needs to find their old Magic and start making good things happen.

 

[drenalin'junkie]

CMs seem to be the ones paying the price. Maybe we'll get another Scrooge remake where executives and shareholders play the part of Ebenezer and CMs are the Cratchits.

 

[glamdring269]

Profits are up and so are prices. People are getting laid off while the dividend is being restored for shareholders. For anyone who hasn't shed the delusion of "pixie dust" and come to terms that Disney is now simply a corporation like any other out to make as much profit as possible, well now is the time. It's right there for anyone who wants to read it.

 

[FastPasser.]

When was the Disney Company not a corporation out to make as much profit as possible?

 

[Jrb1979]

When was the Disney Company not a corporation out to make as much profit as possible?

Not disagreeing with that statement but they used to be better at hiding that fact. Something that Universal does better right now.

 

[reddog21]

When was the Disney Company not a corporation out to make as much profit as possible?

Exactly, the only delusion is people think Disney was never about profits

Not disagreeing with that statement but they used to be better at hiding that fact. Something that Universal does better right now.

How exactly is Universal hiding it??

 

[Jrb1979]

Exactly, the only delusion is people think Disney was never about profits




How exactly is Universal hiding it??

I'm not saying they aren't about profits cause they are. They also do things to show they still care about guests. Something Disney hasn't done the last little while. It's all about how much money they can squeeze out of their guests.

1) maximizing profits
2)maximizing shareholder value
3) making the right people happy
4) making their customers happy

At one point in time number 4 on the list was number 2 behind profits.

 

[StevieB81]

Have you seen the "Mickey Fires Bob Chapek" video? That was pretty realistic, I think, and definitely hilarious.

 

[glamdring269]

When was the Disney Company not a corporation out to make as much profit as possible?

I don’t disagree. But it doesn’t take much reading in this forum to see that many have some type of mental block regarding that fact.

 

[BrianL]

I'm not saying they aren't about profits cause they are. They also do things to show they still care about guests. Something Disney hasn't done the last little while. It's all about how much money they can squeeze out of their guests.

1) maximizing profits
2)maximizing shareholder value
3) making the right people happy
4) making their customers happy

At one point in time number 4 on the list was number 2 behind profits.

Typically doing number 4 will help with number 1.

 

[FastPasser.]

Typically doing number 4 will help with number 1.

Agreed, during my many years as an insider I never ever got the sense that the Guest didn't come first. They really beat it into you with constant training emphasizing that the Guests were the main priority. However, I understand and agree why some would think otherwise, I feel that way at times. I shake my head at the course the Disney Company has been on the last few years. I wish they'd get back to their roots and make Disney, Disney again.

 

[Miffy]

Agreed, during my many years as an insider I never ever got the sense that the Guest didn't come first. They really beat it into you with constant training emphasizing that the Guests were the main priority. However, I understand and agree why some would think otherwise, I feel that way at times. I shake my head at the course the Disney Company has been on the last few years. I wish they'd get back to their roots and make Disney, Disney again.

One of the big draws of Disney, for me, has always been the customer-first attitude. Even now most of the CMs I've dealt with post-pandemic have been top Disney quality, and that's quite a compliment, because that kind of service is absent in many other businesses. It's not that I want to be "served," it's that I'm going to Disney to have a pleasant, happy experience, and the CMs are part of that--smiling faces, kind words, etc.

But, for one glaring example, I had an experience last year at AKL that shocked me in its un-Disney-ness. I was running to catch a bus at the resort bus stop and right before I got there--and the bus driver clearly saw me--the bus pulled away. So I shrugged. I said nothing, just shrugged. While sneering right at me, the bus driver gave me the finger. I have never ever experienced anything like that at WDW and wondered where this person got their training. I wrote to Disney about it and got a canned response, so that was the end of it. I'm still kinda shocked writing about it.

 

[OKW Lover]

FWIW, Josh has stated that while there will be cuts in the parks/cruise/ABD, etc area that he is responsible for, they will not affect front line CM's.

 

[FastPasser.]

But, for one glaring example, I had an experience last year at AKL that shocked me in its un-Disney-ness. I was running to catch a bus at the resort bus stop and right before I got there--and the bus driver clearly saw me--the bus pulled away.

One of my positions for six years was as a WDW bus driver. The driver giving you the finger is disgusting. Was it a WDW bus or one of the third party buses that were brought in to help out during Covid? If it was a Disney driver, I'm in no way defending them but Disney trained drivers are instructed that once they pull away from the stop, even if it's just a few feet, they're not to stop and pick up a Guest. I broke the rules a number of times and did stop. Go ahead Disney, fire me.

I will add that for a long time there has been a shortage of quality drivers and because they're desperate the in depth training is not what it once was.

 

[Narcoossee11]

Park CM hours will be cut. There should be limited lay offs at parks.

 

[BrightMorningStar]

FWIW, Josh has stated that while there will be cuts in the parks/cruise/ABD, etc area that he is responsible for, they will not affect front line CM's.

That sounds great on the surface. Somebody always has to pick up the slack and that means it pulls from the primary duties of that person. I guess it is a wait and see.

 

[Oscar_The_Grouch]

It's unfortunate that we park goers are subsidizing the Fox takeover debacle and Disney+ losses by now having to pay for FastPass, paying through the nose for tickets, having no DME & the loss of other perks. It's a pity the stockholders can't pay for these mistakes, it's a weird form of socialism that we are having to stump up instead of them.

 

[TwoMisfits]

Note on Hulu. I had unsubscribed last year after I used up the content I wanted to see but got an offer sometime in December--a year of Hulu with ads for $1.99/month--so I took it. If there are a lot of Hulu subscribers like me, they're not exactly raking it in there.

Yeah, I picked Hulu with ads and D+ ad-free for 12 months for $4.99 on Black Friday. I had them before, had skipped a year, and now have them this year, and I'll be canceling the day before Black Friday 2023. I figure I can let content build again at that point (since I'm about halfway through all the content I wanted to watch now)...