Disney Announces Layoffs and Cost-Cutting Measures to Increase Profitability of Streaming Business

The Walt Disney Co. announced Wednesday that it will be laying off 7,000 employees and cutting costs by $5.5 billion in the coming months. The strategic reorganization is part of an effort to increase the profitability of Disney’s streaming business and focus more on core brands and franchises.

CEO Bob Iger said during a call Wednesday that the company must return creativity to the center of the company, increase accountability, improve results and ensure the quality of content and experiences. He was critical of activist shareholder Nelson Peltz, saying “there is not a need, plus, he has not articulated either a vision or even ideas that are of particular value to us.”

A spokesman for Peltz said in a statement Thursday that “the proxy fight is over.” Peltz had been demanding changes at Disney and a seat on the company’s board, and Iger’s announcement of the cost-cutting initiatives appears to have satisfied his demands.

The layoffs and cost-cutting measures come as Disney is facing increased competition in the streaming space. The company owns the likes of Marvel, the “Star Wars” franchise and Pixar, all major drivers of revenue and fandom.

The reorganization is expected to be completed by the end of the fiscal year. Disney has not yet released details on which departments will be affected by the layoffs. The company said it will provide additional information in the coming weeks.