Bob Iger steers a 5% rise in Disney shares on restructuring

It reported adjusted earnings per share of 99 cents, ahead of the average analyst estimate of 79 cents, and revenues of $23.51 billion, ahead of Wall Street estimates of $23.4 billion. But it’s the restructuring plan, the third one in five years, that helped steer the climb in shares.

Seven thousand jobs will go, that's about 3.6% of the group’s workforce, in an effort to save $5.5 billion in costs and make its streaming business profitable.

Under a plan to cut costs and return power to creative executives, the company will restructure into three segments: an entertainment unit that encompasses film, television, and streaming; a sports-focused ESPN unit; and Disney parks, experiences and products.

Iger says streaming will remain Disney's top priority. Disney+ lost 2.4 million subscribers in the last three months of 2022, its first quarterly drop, and the streaming media unit lost more than $1 billion in the period.

(Video Transcript)

After the close of business last night on Wednesday, we saw release from Disney, Walt Disney rising 5% in the market, all-sessions on the platform after posting better than expected numbers and revenue as well as restructuring.

Disney reported adjusted earnings per share of $0.99 ahead of the average estimate of 79c. Revenue hit $23.51 billion ahead of Wall Street estimates of $23.4bn.

Now, Walt Disney has announced a restructuring plan as well. The third one in five years will see 7000 jobs will go. That's about 3.6% of the group's workforce, in an effort to save $5.5 billion in costs to make its streaming business more profitable.

Share price chart

If we take a look at the share price chart, you can quite clearly see on the right hand side here, we were well off the highs yesterday and indeed at one point yesterday we hit levels not seen since the 17th of August.

Then came the pullback, but it did end up, as I said, 5% all-sessions on the platform last night under a plan to cut costs and return power to creative executives. The company says it will restructure into three segments: the entertainment unit that encompasses film, television and streaming, a sports-focused ESPN unit, and Disney parks, experiences and products.

Bob Iger, the incoming chief executive, return to the business. This was the vertical dotted line here, which I drew a few days ago, which shows when Bob Iger came back to the business. He is focusing on the streaming business. It remains Disney's top priority.

Walt Disney also vowed to reinstate a dividend for shareholders, according to the chief financial officer last night. Christine McCarthy said the initial dividend would likely be a small fraction of the pre-COVID level, with a plan to increase it over time.

Things are looking good for Disney. It'll open again at 9:00 this morning on the platform all-sessions.