Disney boss declares new era after job cuts

The big problems at Disney have been fixed, the boss of the entertainment giant has told investors.

Boss Bob Iger said he believed the company was entering a new “era of building”, after a painful year focused on job cuts and restructuring.

He said the moves were paying off in bigger savings and other growth.

“While we still have work to do … our progress has allowed us to move beyond this period of fixing and begin building our business again,” he said.

Disney has been grappling with a sharp decline in its traditional television and movie business.

Last year, the board of the company abruptly recalled Mr Iger from retirement and reinstated him as chief executive, as the company grew alarmed by big losses incurred by its new streaming business, Disney+.

The company’s stock price has dropped by more than half since its 2021 peak, and it has remained the target of activist investors who are impatient for improvement.

Losses in its streaming business are narrowing, Disney said.

The core streaming offering, which does not include Hotstar in India, added nearly 7 million subscribers over the three months ended in September, as films such as Guardians of the Galaxy 3, Little Mermaid and Elemental drove people to the platform.

The unexpectedly strong gains helped to shrink operating losses to $420m (£341m), compared with more than $1.4bn at the same time last year.

Disney has been making other moves to enhance its online offerings, which also include the sports-focused ESPN+.

It also recently announced it would move forward to acquire the third it did not already own of Hulu, which offers general audience material, as opposed to family or children-specific viewing.

Mr Iger said the company, which recently raised its prices, would launch a trial version within weeks that combines Hulu and Disney+ shows.

“Integrating Disney+ along with Hulu and ESPN in the future will put the company in a strong position to drive [subscribers], engagement and importantly revenue either through subscription or advertising,” said Paolo Pescatore of analysts PP Foresight.

Mr Iger said the entertainment giant was on track to slash expenses by $7.5bn – a boost of some $2bn more than his original target.

The move follows more than 8,000 job cuts at the company and coincides with a strike by Hollywood actors, which has put productions on hold.

Mr Iger blamed some of Disney’s woes on an emphasis on quantity over quality, as it tried to expand its offerings for the streaming service.

He said the company was now focused on producing fewer, better titles, which could help improve its profits and popularity.

The company said it expected to spend $25bn on content over the next 12 months, of which 40% will go to purchasing sports rights. That is $2bn less than the current year.

Overall, revenue grew 5% over the three months ended in September to $21.2bn. It increased 7% over the company’s financial year, which ended 30 September.

The company reported profit of $264m in the quarter and nearly $2.4bn (£1.9bn) for the year.

Shares ticked higher in after-hours trade.

“These results will give CEO Bob Iger some breathing room to shift into what he calls a ‘building’ phase,” said Insider Intelligence principal analyst Paul Verna. But he added “There are still massive challenges ahead.”