Disney to Cut 10% of Its Costs: Up to 300 Layoffs Possible

The Walt Disney Company World Headquarters
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Disney’s Television Group Likely to Get Hit with a String of Layoffs

Media entertainment giant Walt Disney Co is initiating a restructuring effort that will allow it to cut the annual costs of its television division by about 10%. Up to 300 jobs are at stake as Disney seeks to reduce is operating expenses.

The cuts are expected to directly affect Disney’s ABC broadcast network, “ABC News,” Disney’s TV production studio, and some of the company’s local TV channels. There will also likely be cuts at the Disney-owned cable TV networks “Freeform” and “Disney Channel.”

The restructuring is related to spending cuts that are expected in Disney’s next fiscal year, which begins in September. That is when further details about the budget cuts, including the specific number of job cuts (via layoffs and attrition), are expected to be revealed. Disney’s “ABC Television Group” currently employs nearly 10,000 employees.

This turn of events follows a decline in Disney’s operating income from its cable network division in recent quarters. The company has been generating lower advertising revenue from its TV channels as both viewers and advertisers shift to rival online video streaming channels.

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Just three months ago, Disney laid off 100 employees at its ESPN sports network—which has been facing a declining subscriber base, despite being the biggest sports channel in the United States. The current round of layoffs will, however, not affect ESPN.

Disney views the decline in its cable channel subscribers as a result of viewers shifting toward online streaming services like “Netflix,” “Hulu,” and Amazon.com, Inc.‘s “Prime Video.”

As more Americans seek their entertainment through handheld devices connected to high-speed Internet, the old television-watching trend is dying. The aforementioned streaming services, which are easily accessible on smart devices, are stealing subscribers away from old-school cable networks.

Seeing the trend, Disney has likewise announced plans to start its own streaming service. The company plans to beat the likes of Netflix by offering competitive prices on monthly and annual subscriptions.

It’s evident that Disney is scaling back its cable network operations while shifting its focus to online streaming. The cost savings from the restructuring could be diverted to the new initiative. Regardless, the move will hurt hundreds of people employed at the company’s TV operations.

 

Source

Disney to Cut Staff at ABC Television Group,” The Wall Street Journal, August 30, 2017.

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