They pay US $ 20 million to the former CEO of Disney 0:59
(CNN) --
Disney announced it would cut 7,000 jobs from its workforce globally, a move that joins big companies in cutting back.
Disney had about 220,000 workers as of October 1, about 166,000 of whom were employed in the United States.
A 7,000 job cut represents about 3% of its global workforce.
“While this is necessary to address the challenges we face today, I do not take this decision lightly,” said CEO Bob Iger, who returned to lead the company in November when the board fired Bob Chapek as company leader.
"I have enormous respect and appreciation for the talent and dedication of our employees around the world, and I am aware of the personal impact of these changes."
The job cuts are part of a cost-cutting effort also announced Wednesday.
Iger said the company is targeting $5.5 billion in cost savings across the company, $2.5 billion of which comes from "non-content" operations such as movies and TV shows.
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The cuts come as the company announced its financial results, which were better than expected.
Disney's revenue for the quarter rose 8% to $23.5 billion, beating earlier estimates of $23.4 billion from analysts surveyed by Refinitiv.
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But earnings, though slightly lower than a year ago, beat forecasts and came in at $0.99 a share, excluding special items.
That's less than the $1.06 a share it earned on that basis a year earlier, but much better than the forecast of $0.78 a share.
Iger also took steps to reward shareholders, while Disney employees will feel the pinch from the job cut announcement.
The company had suspended its dividend payments during the pandemic.
Iger announced that he expects her to return.
“Now that the impacts of the pandemic on our business are largely behind us, we intend to ask the board to approve a reinstatement of a dividend by the end of the calendar year,” he said.
“Our cost reduction initiatives will make it possible.
And while it will initially be a modest dividend, we hope to build on it over time."
Disney shares rose 8% in the secondary market after the announcement of cost reduction and the return of the dividend.
Disney shares lost 43% of their value in 2022 but have risen nearly 22% since Iger's return was announced in November, much better than the broader market but trailing gains in the same period in other media companies, such as Netflix or Warner Bros. Discovery, the owner of CNN.
Subscriptions on Disney+ drop
In other financial results, Disney reported that it lost subscribers to its streaming service Disney+ in the last quarter, but also pared its losses from the previous three-month period.
The number of subscribers was down just 1%, from 164 million to 162 million, by the end of the quarter ending Oct. 1.
But its other streaming service businesses, including ESPN+ and Hulu, in which it has a stake, increased subscribers by 2%.
That helped Disney trim its loss in the overall streaming segment to $1.1 billion in the quarter, down from $1.5 billion in the quarter ended Oct. 1, though it was nearly double the loss. loss of US$ 593 million reported the previous year.
Disney's streaming services, highlighted by its Disney+ offering, had reported increases in both subscribers and losses in recent quarters.
With consumers leaving cable services that have paid Disney billions over the year in subscription fees, the need for a money-making streaming offering is seen as critical.
The company reaffirmed its guidance that Disney+ remains on track to be profitable in the next fiscal year, which runs from October to September 2024, although it warned that it could be hit by an economic downturn.
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This is the first quarterly result since previous CEO Chapek was fired by the board in November and replaced by his predecessor, Bob Iger.
While Iger has announced some changes, many investors had been looking to these quarterly earnings for clarity on Disney's strategic direction going forward.
Iger announced that he will combine all of his global media and content businesses, including streaming services, into a new segment to be known as Disney Entertainment.
He said the shakeup is key to a "return [of] creativity to the core of the company."
“After a strong first quarter, we are embarking on a significant transformation, which will maximize the potential of our world-class creative teams and our unparalleled brands and franchises,” Iger said in the statement.
“We believe that the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our broadcast business, better position us to face future disruptions and global economic challenges, and provide value for our shareholders.
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Results from streaming services helped the company report better-than-expected financial results, though it was strong movie ticket sales, led by "Avatar: The Way of Water," and an increase in revenue from theme parks due to pent-up demand in the wake of a covid-19 affected period a year earlier, the main drivers.
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