By Yasin Ebrahim and Geoffrey Smith
Investing.com -- Walt Disney (NYSE:DIS) became the latest big employer to cut thousands of jobs, as returning CEO Bob Iger moved to ease pressure from shareholders unhappy at the cost of its move into streaming
The entertainment giant is looking to cut $5.5 billion in cost savings by bringing its original content businesses under one roof, alongside ESPN sports networks business and its theme parks.
Disney stock rose over 6% in after-hours trading on Wednesday after Iger announced the measures on a conference call, which followed a better-than-expected result in its fiscal first quarter. The surprise was due largely to the parks business, where revenue jumped 21% to $8.74B.
Earnings per share fell some 7% to 99c but were still some 25% above consensus forecasts and a marked improvement on the previous quarter. Group revenue also came in slightly ahead of forecasts at $23.51B.
Losses narrowed at the Disney+ streaming business, as the company appeared to sacrifice the 'growth at all costs' approach that Iger's predecessor Bob Chapek had taken. However, Disney+ and Hulu eked out only modest gains in subscribers and average revenue per user fell, against a backdrop of squeezed household budgets and depleted pandemic savings. The D2C operating loss was $1.1B, more than double last year's figure, but still narrower than the $1.5B posted in the previous three months.
Disney+ added 1.4 million subscribers in the quarter to 104.3 million as of the end of the quarter, a gain of 1%. Hulu and ESPN both saw their subscriber base rise by 2%.
However, the Hotstar service lost 6% of its subscribers after giving up rights to broadcast Indian Premier League cricket matches. As a result, the global D2C business posted a 1% drop in overall users to 161.8 million as of the end of the quarter.
As such, the streaming business continued to exert a significant drag on cash flow. Net outflows more than doubled on the year to $2.16B. Despite this, Iger told the conference call that he will ask the board to resume dividend payments by the end of the calendar year.
Disney is under pressure from activist investor Nelson Peltz to rein in costs. Peltz’s Trian Partners, which owns about 0.5% of Disney, is locked in battle with Disney for a board seat at the April 3 annual meeting after his request was denied last month.