BITE | Disney Reorganizes: Company Announces Three Segment Restructuring
Disney, adapting to the new times. Read it now in this new Bite, a short article with the relevant information you need to know.
In this entry:
Learn about its different business segments
What will its restructuring be like?
The Walt Disney Company (DIS) is a multinational media and entertainment conglomerate that has become one of the world's largest entertainment companies. It was founded in 1923 by Walt Disney and Roy O. Disney. It has since grown into a company with a wide range of businesses, including media networks, parks and resorts, entertainment studios, consumer products and interactive media.
The media networks segment includes cable channels such as ESPN and Disney Channel, television channels such as ABC and Freeform, and radio stations such as ESPN Radio. The parks and resorts segment includes theme parks such as Walt Disney World Resort in Florida and Disneyland Resort in California. The studio entertainment segment produces and acquires live-action and animated films, music, and plays. The consumer products segment licenses Disney characters and franchises to manufacturers, publishers and retailers for products such as toys, apparel and home décor. The Interactive Media segment creates and distributes games, apps and other digital content for mobile devices and online platforms.
Disney significantly influences popular culture and is recognized around the world as a symbol of creativity, innovation and quality entertainment. Its media networks reach millions of viewers, and its parks and resorts are visited by millions of people each year. Disney is one of the largest employers in the entertainment industry. It continues to expand its business through investments in new technologies and acquisitions of other companies, securing its position as a leader in the communications sector.
Disney Restructuring
Disney announced this year a major restructuring of the company into three segments: Disney Entertainment, ESPN, Parks, Experiences and Products. CEO Bob Iger made the move after the company released its latest quarterly results and faced a proxy fight with activist investor Nelson Peltz and his firm, Trian Management. The restructuring process includes cutting $5.5 billion in costs and eliminating 7,000 jobs, representing about 3% of its workforce. The entertainment division will be headed by Dana Walden and Alan Bergman, considered possible candidates to take over from Iger in the near future. President Jimmy Pitaro will lead ESPN, while Josh D'Amaro will continue to head the Parks, Experiences and Products unit.
The restructuring process was triggered following the release of Disney's disappointing fiscal fourth-quarter results and key revenue segments. Previous CEO Bob Chapek warned that Disney's strong streaming numbers would decline and had announced plans to cut costs with measures such as hiring freezes and layoffs. Iger returned to lead the company and sent a memo to employees in which he announced the restructuring of Disney's Media and Entertainment unit, prompting the departure of Kareem Daniel, the head of the former media and entertainment unit. Iger stated that the goal of the restructuring was to return more decision-making power to the creative teams and to reduce costs.
Iger stressed the importance of creativity in the company's success, stating that nearly every dollar earned, transaction and consumer interaction originates from something creative. He believes that the best way to stimulate creativity is to give more power to the people who manage the creative processes. This restructuring at Disney is an important step that will impact the future of the company and demonstrate its commitment to creativity and innovation while reducing costs. The impact of the restructuring remains to be seen, but it is clear that Disney is determined to maintain its position as a leader in the communications industry.
*This is an illustrative example and does not represent an investment recommendation.