Disney is not having a good time. Just as it finalised the multi-billion dollar takeover of Fox, the COVID pandemic hit. A company that relies on packed movie theatres and theme parks thronged with vacationers for a significant proportion of income found both of those revenue streams screeching to a halt.


This coincided with some disastrous culture war tussles that saw vast swathes of the American public, their core customers, turn away from their brand and cost them significant political capital in key territories.

Meanwhile, their pricing structure at their theme parks meant it became an option only for high earning households, putting the experience beyond the reach of millions of customers.

Yesterday we talked about how this financial turmoil has caused activist investors to start manoeuvrers. This morning comes yet more news that will potentially energise such investors.


The Disney+ service lost 2.4 million subscribers in the last three months of 2022. This was the first decline since launching in late 2020.

US-based analysts were surprised by the size of the drop. International observers not so much. It is driven entirely by a 3.8 million decline in Disney+ Hotstar in the Indian sub-continent and Southeast Asia. This wiped out the gains in the US and Europe. The reason for this decline? Disney+ lost the rights to the Indian Premier League cricket competition to to Paramount. This is a globally recognised elite competition with billions of fans worldwide.

They are now flat at 161.8 million subscribers globally. As we have said before at Last Movie Outpost, as growth cools and the market saturates, analysts are looking less at growth and more at profitability of services. Here is where Disney has to make its move.

In a quarterly earnings call to investors, Iger revealed plans to return the streamer to growth and significantly cut costs across the whole Disney empire:

“We are embarking on a significant transformation, one that will maximize the potential of our world-class creative teams and our unparalleled brands and franchises. We believe the work we are doing to reshape our company around creativity while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges and deliver value for our shareholders.”

Reducing expenses? By how much? Well… quite a lot, it turns out. They are looking to cut a staggering $5.5 billion of costs.

A new Disney Entertainment unit will be created under executives Dana Walden and Alan Bergman. This means Disney Media & Entertainment Distribution is disbanded. The thinking is this returns authority to the studio’s creative teams and reverts back to the structure in place last time Bob Iger was in charged. Disney+ and Hulu are under the new division.

Iger and Chapek

So now Disney will have three core division. 1) ESPN. 2) Disney Parks, Experiences and Products. 3) Disney Entertainment.

This will pave the way to cut $3 billion from non-sports content, and $2.5 billion coming from general operating expenses.

This translates as a 7,000 employee reduction. 3.2% of total. They will still spend $30 billion on content this year as they aim for profitability in fiscal year 2024. Iger has confirmed ESPN is not for sale. Some observers expect a Hulu and Disney+ merger to be on the horizon to pool content and rationalise operations to realise savings.

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