The Walt Disney Co. will reduce its workforce by 7,000 and restructure into three core business segments, CEO Bob Iger said Wednesday on a call with financial analysts.
The call was the first for Iger after reclaiming his role as CEO last November following the ouster of Bob Chapek.
Disney Parks, Experiences and Products will remain one of the three core business segments of the company, with chairman Josh D'Amaro continuing at the helm. The two other core segments will be Disney Entertainment -- including all entertainment media and content businesses -- and sports broadcaster ESPN.
Iger said Disney is looking to achieve cost savings of $5.5 billion across the company, generally coming from operating costs. That includes the elimination of 7,000 jobs. Iger did not specify which business segments would be impacted.
"While this is necessary to address the challenges we're facing today, I do not make this decision lightly," Iger said. "I have enormous respect and appreciation for the talent and dedication of our employees worldwide, and I'm mindful of the personal impact of these changes."
Avatar attraction coming to Disneyland
Iger teased a new experience related to the Avatar franchise coming to the Disneyland Resort, with more details expected soon. The franchise's most recent installment, "Avatar: The Way of Water," debuted in theaters last fall and is the fourth-highest grossing film of all time.
Disney's first fiscal quarter of 2023 was an "outstanding quarter" for theme parks, Iger said. He noted that Disney is still controlling capacity to prevent overcrowding and that recent price adjustments show Disney is "listening to guests' feedback."
CFO Christine McCarthy said attendance at domestic parks was up from the prior year. Based on bookings, the company expects that trend to continue.
Disney Wish a high performer
In Disney's fiscal first quarter, Disney Parks' operating income was up 25% to $3.05 billion, despite Disney reducing park capacity during peak periods by about 25% compared to prepandemic levels to improve the guest experience, she said. Per-capita spending by guests grew strongly in the quarter. Revenue was up 21% to $8.73 billion.
Disney Cruise Line was also a "meaningful contributor" to the increase in operating income, McCarthy said. The cruise line had higher occupancy throughout the fleet and its newest ship, the Disney Wish, had positive operating income in its first full quarter of operations.
Internationally, Disneyland Paris enjoyed growth, and the company saw higher royalties from Tokyo Disney. Shanghai Disney suffered due to a Covid-19-related closure that lasted nearly a month.
Theme park demand 'extraordinary'
Iger addressed theme park demand in more detail following an analyst's question and said it remains "extraordinary."
"We could lean into that demand easily by letting more people in and by more aggressively pricing," he said. "We don't think either would be smart because if we let more people in, it's going to reduce guest experience. That's certainly not what we want."
He also addressed pricing.
"It's clear that some of our pricing initiatives were alienating to consumers," he said. "I've always believed, by the way, that accessibility is a core value of the Disney brand. We were not perceived to be as accessible or as affordable to many segments as we probably should have been."
Hence, the company's efforts to address pricing that drew "really great reaction." For instance, Iger pointed out that the cheapest tickets to visit Disneyland Park were only available for about 15 days a year previously. This year, that number has expanded to 50 days a year.
The company is interested in adding new theme park areas. He again referenced the new Avatar experience coming to Disneyland.
"We have other opportunities as well," Iger said. "I've talked to Josh D'Amaro about this very recently, like this morning, to really look at all the great franchises the company [has] and see where we can invest in them in the parks to increase capacity while preserving guest satisfaction."