Disney preparing thousands of layoffs as managers told to find 20% in savings, fourth round this year

The company has promised double-digit growth in adjusted earnings per share in the current fiscal year. Disney's own guidance for fiscal 2026 is adjusted earnings per share growth of about 12%, or about 16% including an extra 53rd week, and double-digit growth again in fiscal 2027 excluding that week.

The earlier rounds

Disney eliminated 1,000 roles in April and made further cuts in July and September, the latter mainly in technology and human resources. In August it offered voluntary early retirement to executives, and Chief People Officer Sonia Coleman said the company was focused on meaningfully reducing costs. Less than a week before the latest reports, the theme parks division cut jobs across Imagineering, its design and engineering unit, with reports varying between at least 100 and 100 to 200 people. On 1 October a newspaper reported a planned restructuring of the television division and cuts in the legal and global affairs unit.

Disney has done this before. In 2023 it announced about 7,000 job cuts as part of a plan to save $5.5 billion, and over recent years it has cut billions of dollars in costs and thousands of positions across ABC, Pixar, ESPN, the film studio and the experiences unit. Disney President Dana Walden said at a conference last month that there is a need to constantly evaluate how you're structured and how big is the organisation.

Why now

The reports cite weak box office revenue, competition in streaming, slowing international visits to the theme parks, and the growing use of artificial intelligence in the business. Other media companies have faced the same pressure. Netflix, Sony Pictures and the Paramount and Warner Bros. divisions have also cut jobs as traditional television revenue declines and streaming subscriber growth slows.

The company's recent results show a business that is growing but under pressure to protect its margins. In the quarter ended in June, which was D'Amaro's first full quarter as chief executive after he succeeded Bob Iger in March, revenue was $25.2 billion, up 7%, and total segment operating income rose 21% to $5.6 billion. Adjusted earnings per share were $2.06 against $1.61 a year earlier. Disney+ and Hulu together made a profit of $712 million, more than double the year before, though the margin was helped by the timing of marketing and programming spending and by about $100 million of a tariff refund. The experiences division had record third-quarter revenue of $10.0 billion, up 10%, and the film Toy Story 5 helped the studio. Revenue was slightly below analysts' estimates even though earnings beat them.

Disney has said in its own results that the effort is mid-stream. When it reported the June quarter in August it said it was pursuing further layoffs and cuts in selling, general and administrative costs, and it said it expected to spend at least $9 billion on share buybacks this year after selling its 50% stake in A&E Global Media to Hearst for $1.2 billion. Its streaming business now brings in more revenue than its traditional television business: entertainment streaming revenue rose 11% to $5.5 billion, with subscription revenue up 15% and advertising up 3%, and D'Amaro called Disney+ the digital centrepiece of the company. Disney+ and Hulu are due to become one app by the end of the year, the company is exploring a free tier, and it has stopped disclosing subscriber numbers.

Not every division is doing well. In that quarter the entertainment segment's profit rose 64% to $1.68 billion, with Toy Story 5 passing $1 billion at the global box office, but The Mandalorian and Grogu and a live-action Moana underperformed. The sports segment's profit fell 17% to $858 million, because of NBA playoff sweeps and a carriage dispute with a network, and content sales fell 6% to $1.6 billion. In the parks business, softness in Asian theme parks continued even as record revenue was reported.

The key questions are how many roles go, where, and when. The reports do not say whether the cuts will be announced in one round or in stages, as earlier cuts were, and they do not say which parts of the parks division or the networks would take the deepest reductions. The company is due to report its next quarter's results in the coming weeks, which is the most likely occasion for Disney to explain the scale of any restructuring to investors.

For the employees, the reports describe another year of uncertainty at a company that has already cut thousands of jobs since 2023. For investors, the plan matches a pattern in the industry of trading headcount for margin, and the test will be whether the savings are spent on the programming and parks investments that D'Amaro says they will fund.