Charley Gallay
The return of Bob Iger to Walt Disney's (NYSE:DIS) CEO job in November promised a reversal of the company's recent fortunes - and some potentially big changes to the company's structure.
That will include cutting 7,000 workers, Iger confirmed on the company's earnings conference call (still ongoing) following an earnings beat that pushed the stock higher after hours. Iger also goosed the stock to a 9% gain by mentioning trying to restore Disney's dividend this year.
"I've always believed that the best way to spur great creativity is to make sure the people who are managing the creative processes feel empowered," Iger said. "Therefore, our new structure is aimed at returning greater authority to our creative leaders and making them accountable for how their content performs, financially. Our former structure severed that link and it must be restored."
That means reforming into three companywide business units: Disney Entertainment, led by Alan Bergman and Dana Walden; ESPN, still led by Jimmy Pitaro; and Disney Parks, Experiences and Products, still led by Josh D'Amaro. With ESPN split off from the former Disney Media, Entertainment and Distribution, it will encapsulate ESPN Networks, ESPN+ and ESPN International.
Alongside that will come a push for efficiency that targets $5.5B in cost savings.
Reductions to non-content costs will total some $2.5B, with $1B in savings already under way, Iger said. That will incorporate cutting the workforce by 7,000 jobs.
On the content side, "we expect to deliver approximately $3 billion in savings over the next few years, excluding sports," he said.
Reestablishing the connection between content decisions and their financial performance is "one of the most important steps we can take to improve the economics of our streaming business. There's a lot to accomplish. But let me be clear: This is my No. 1 priority."
As for some long-awaited news about the company's dividend: "As a result of the impact of the COVID pandemic, we made the decision to suspend the dividend in the spring of 2020. Now that the pandemic impacts to our business are largely behind us, we intend to ask the Board to approve the reinstatement of a dividend by the end of the calendar year."
At the point Iger mentioned the dividend restoration, the stock rose to a 9% gain after previously setting up 3%.
Updated: Iger said he knew breaking out ESPN into its own unit would lead to persistent questions about a potential spin-off.
"We did not do it for that purpose. Actually, ESPN is a differentiator for this company," Iger said.
"It is going through some obviously challenging challenging times because of what's happened in linear programming. But the brand of ESPN is very healthy, and the programming of ESPN is very healthy. We just have to figure out how to monetize it in a disrupting and continuing disrupting world," he said, adding Disney isn't engaged in conversations about or considering a spin-off of ESPN.