Disney cost-cutting efforts exceed goal amid restructuring

The Burbank-based Walt Disney Co.’s extensive cost-cutting effort, which included the elimination of about 7,000 positions, has exceeded its original goal, the entertainment giant announced Wednesday as it released its third-quarter earnings report.

“Our results this quarter are reflective of what we’ve accomplished through the unprecedented transformation we’re undertaking at Disney to restructure the company, improve efficiencies and restore creativity to the center of our business,” Disney CEO Bob Iger said in a statement.

“In the eight months since my return, these important changes are creating a more cost-effective, coordinated and streamlined approach to our operations that has put us on track to exceed our initial goal of $5.5 billion in savings as well as improved our direct-to-consumer operating income by roughly $1 billion in just three quarters.

“While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory because of the work we’ve done, the team we now have in place, and because of Disney’s core foundation of creative excellence and popular brands and franchises.”

The company reported overall third-quarter revenues of $22.3 billion, up 4% from $21.5 billion during the same quarter last year. Operating income came in at about $3.6 billion, roughly equivalent to the prior year quarter.

Disney’s Parks, Experiences and Products segment saw a 13% jump in revenue, reaching $8.3 billion from $7.4 billion in the third quarter of last year.

The company reported a total of 105.7 million Disney+ subscribers — domestically and internationally — marking a slight 1% improvement from a year ago.

One component of the company’s cost-cutting effort has been to reduce losses incurred by Disney’s direct-to-consumer business, with third-quarter losses reported at $512 million. That’s down from more than $1 billion in same quarter a year ago, while revenues increased to $5.5 billion, up 9% from about $5 billion a year ago.

Disney announced separately Wednesday that it will introduce a lower- cost, ad-supported version of Disney+ on Nov. 1 in select European markets and Canada. The company introduced an ad-supported version of the service in the United States last December, costing $7.99 per month, compared to the $10.99 ad- free version.

Beginning Sept. 6, U.S. customers will also be able to purchase an ad- free bundle of Disney+ and Hulu for $19.99 per month, the company announced.

“The strong momentum of our ad-supported plans in the U.S. demonstrates the importance of providing consumers with choice, flexibility and value,” Joe Earley, president of Disney direct-to-consumer business, said in a statement.

“We are excited to expand that offering in more markets across the globe, including in Europe and Canada, and to launch a new premium duo bundle of ad-free Disney+ and Hulu this fall, as we take steps toward making extensive Hulu content available via Disney+ later this year for bundle subscribers.”

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