The Walt Disney Company reported its fourth-quarter earnings after the bell yesterday. The results were a mixed bag, with some parts of Disney’s business, such as Disney Plus, doing better than expected, while other areas, such as ad revenue, did worse. But one of the main takeaways investors seem to have viewed positively was that Disney announced it will cut another $2 billion in costs.
Back in February, Disney first announced it was implementing $5.5 billion in cost-cutting measures to increase its bottom line. Those cost savings were found primarily by mass layoffs—the company cut approximately 7,000 jobs over the next several months. Yesterday’s announcement to cut an additional $2 billion in costs means the House of Mouse will have reduced its spending by a total of $7.5 billion once the additional cuts are made.
But where will the next $2 billion in cuts come from? The good news is that the brunt of the $2 billion in cuts will likely not involve cutting additional jobs. A Yahoo Finance report says that $1.5 billion of the additional $2 billion in cuts will be made in content spending. Whether this means a reduction in spending on new content or pulling shows from Disney Plus so the company doesn’t have to pay residuals remains to be seen.
As for Disney’s Q4 2023 earnings, there was some good news for its Disney Plus subscription service: It added another 7 million core subscribers in the quarter for a total of 150.2 million. As CNBC notes, the street had expected only 148.2 million subscribers. But while revenue was up 5% to $21.24 billion, it came in below expectations. That wasn’t helped by the fact that Disney’s ad revenue was down, primarily because of its ABC network and television stations.
The Walt Disney Company (DIS) shares are currently up 4.2% to $88.08 in premarket trading, as of the time of this writing. However, the share price is a long way from its 2023 high of over $110 in January.
The entertainment industry has been impacted this year by a months-long actors’ strike, which is expected to end this week after SAG-AFTRA reached a tentative deal with Hollywood studios.
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