Disney Starts Cutting 7,000 Jobs This Week to Help Its Streaming Service
Reductions likely signal less need for office from the entertainment sector that drives Southern California
By Greg Cornfield March 27, 2023 3:05 pm
reprints
The Walt Disney Company will start to cut 7,000 corporate jobs this week, adding to the tech and media labor reset that has affected some of the largest and most valuable companies in the entertainment industry over the past year.
The Burbank, Calif.-based media giant is trying to turn a profit on its streaming service as it battles for subscribers against competitors like Netflix, Amazon Prime and HBO. But the layoffs add to the mounting labor contraction similarly hitting companies such as Amazon, Facebook and, to a lesser extent, Netflix. These reductions signal less need for office space, and a slower pace of acquisitions and leasing for the foreseeable future for the entertainment business that drives Southern California.
Disney CEO Bob Iger had said in February that the company would be eliminating jobs to save $5.5 billion. The first wave of Disney employees to be let go will be notified this week, Iger said in a memo on Monday, the L.A. Times reported. “Several thousand more” cuts will come in April, followed by a final batch before the start of summer.
The cuts will affect departments that include the now-disbanded Disney General Entertainment and Disney Media and Entertainment Distribution, which involves the company’s streaming platform and its movie and show production business. Some corporate jobs and positions in theme parks and consumer products will also be cut.
“The difficult reality of many colleagues and friends leaving Disney is not something we take lightly,” Iger wrote in the memo, according to the Times. “For our employees who aren’t impacted, I want to acknowledge that there will no doubt be challenges ahead as we continue building the structures and functions that will enable us to be successful moving forward.”
While the elimination of thousands of corporate employees sounds like another bad sign for office development, Iger is a noted advocate for in-person work. The CEO ordered employees to return to the office four days per week in a policy change that took effect earlier this month.
The streaming wars have made office and studio landlords wildly successful in Los Angeles the past several years, especially since the pandemic hit. Companies like Disney and now Apple earmark billions of dollars per year for content creation. But it appears the streaming platforms expanded too quickly. While it projects to be profitable by the end of 2024, Disney’s streaming business lost more than $1 billion during the first quarter this year.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
