How Can Disney Afford 13,000 New Jobs While Cutting $5.5 Billion?

Things at Disney are getting a little…complicated.

Job cuts are happening, but at the same time the creation of thousands of new jobs has been announced — how does it all make sense? Disney CEO Bob Iger and other executives have made a number of statements over the past few months about the job cuts, Disney’s plan to adjust its spending, and other big changes being made at the Company but today we’re taking a look at just how these fit with one another.

During the 2023 annual shareholder meeting, Iger discussed some big plans for the Disney parks. In discussing how Disney will preserve shareholder value, Iger said Disney is “currently planning now to invest over $17 billion in Walt Disney World over the next 10 years.”

That investment will help add an additional 13,000 jobs within the company, and thousands of other indirect jobs as well. Wait a minute…didn’t Disney also announce that it would be cutting 7,000 jobs and $5.5 billion in spending? We’re not math experts, but something here seems a little…off?

What’s really happening here? Well, here’s what we know and what factors could actually be at play.

7,000 Layoffs

First, let’s talk about the 7,000 layoffs. Recent reveals about the layoffs have given us a better idea of who is being impacted. Josh D’Amaro — Disney Parks, Experiences, and Products (DPEP) Chairperson — indicated in February of 2023 that every segment across the company would be impacted by the job cuts, but these cuts were NOT expected to affect those working in hourly frontline operations roles, like the Cast Members you see in the Disney parks each day, running the rides, restaurants, and gift shops.

This was emphasized again later in April when big cuts were announced that would bring Disney’s job cut count to around 4,000 people. Disney Entertainment, ESPN, and Disney Parks, Experiences, and Products would all be affected, but the Company noted that the hourly frontline positions within Parks and Resorts would be safe from these cuts.

So who is being impacted? Well, it seems many of the cuts are on the executive or more business-oriented side. In fact, in late March when some job cuts were expected to begin, Variety reported that the cuts were expected to impact “senior management levels as well as lower-level executives.”

For example, Disney has made job cuts impacting the people working on the prior Metaverse projects and Amazon Prime-like service. One of the first waves of the layoffs was focused on a consolidation of some production operations within Disney’s TV studios, Freeform, and FX, as well as the shutdown of the Creative Acquisitions department (and the departure of its head executive).

Marvel Entertainment Chairman (Isaac Perlmutter) was also let go. Perlmutter was reportedly told that the small division he was the chair of was redundant and would be absorbed into other parts of the company. (Though Perlmutter seems to debate the “real” reasoning behind his firing.)

Other people impacted have included Jeffrey R. Epstein (Communications Vice President), various individuals within “ABC and Freeform’s senior programming ranks, Disney Television Studios marketing, which is being dissolved (according to Deadline), and its music operations, which are being consolidated,” and (according to Variety) potential cuts at FiveThirtyEight (ABC News reportedly plans to create a “more efficient structure for FiveThirtyEight”).

That’s not to say that other non-executives may not be impacted or that the theme parks are totally “safe” from job cuts. In fact, Disney had previously indicated that the thousands of job cuts expected in late April would include 15% of entertainment Cast Members and would include Cast Members working across TV, film, theme parks, and corporate teams in every region where Disney operates.

But still, it seems many of the big cuts are coming from the dissolution of certain departments, the consolidation of others, and several cuts in executive leadership.

Cutting $5.5 BILLION in Spending

What about all that talk of cutting $5.5 billion in spending too? Well, there are different ways in which Disney is working to achieve that — and some of it has to do with the job cuts.

Specifically, about $2.5 BILLION of the cost cuts will come from “reductions to our noncontent costs, not adjusted for inflation.” According to Iger, “$1 billion in savings is already underway.” According to Disney’s Chief Financial Officer, Christine McCarthy, these non-content costs will be broken down as follows:

• 50% marketing
• 30% labor
• 20% technology, procurement, and other expenses

McCarthy said, “The bulk of the efficiencies we are realizing this year are related to reductions in marketing and headcount at DMED (Disney Media & Entertainment Distribution).” Iger has largely done away with the old DMED structure that was put in place under Chapek and has reorganized the Company into 3 divisions.

The 7,000 job cuts are part of these non-content spending cuts.

Beyond that, cost cutting with come from the content side. Iger said, “On the content side, we expect to deliver approximately $3 billion in savings over the next few years, excluding sports.”

Iger indicated that Disney is going to “take a really hard look at the cost for everything that [they] make, both across television and film, because things, in a very competitive world, have just simply gotten more expensive.”

Click here to see what word Iger can’t stop using

13,000 New Jobs?

So how can Disney do all of that but also announce the creation of 13,000 jobs within the company? Well, Iger specifically noted that they’re planning to invest $17 billion in Walt Disney World over the next 10 years, which would lead to the creation of 13,000 jobs within the company and thousands of other indirect jobs.

Since the investment that will create these 13,000 jobs is specifically an investment in Disney World, it’s likely that those 13,000 jobs could be front-line Cast Members or jobs for somewhat similar roles. We’re talking more ride operators, more housekeeping staff, etc. It is, presumably, much “cheaper” for the Company to hire positions for these types of jobs than high-level (or even mid-level) executive jobs or even more behind-the-scenes business-focused jobs.

That seems to match up with the fact that D’Amaro had previously indicated that front-line workers in the parks would generally be “safe” from these 7,000 job cuts. It makes sense then that many of the 13,000 new jobs that would be created over the next 10 years would be in these same front-line roles which pay less (though some pay raises are on the way).

Plus, we have to remember that Iger said that the $17 billion investment in Disney World that’ll help create 13,000 additional jobs will be done over the next 10 years. While the 7,000 job cuts and $5.5 billion cut in spending are happening on a more immediate basis, those additional jobs may not be created for many years to come — giving Disney plenty of time to budget for it.

And the parks division has been the one bringing in the big bucks lately, while Disney’s direct-to-consumer business has reported large losses. So it again would make sense for more of these new roles to potentially be front-line jobs on the parks side, the division that continues to provide Disney with a steady stream of revenue.

What do you think? Will Disney be able to handle cutting $5.5 billion in costs, cutting 7,000 jobs, investing billions in Disney World, and creating thousands of new jobs, all while handling the Reedy Creek Improvement District drama with Ron DeSantis and more? Only time will tell, it seems.

We’ll keep an eye out for more updates as things start to change throughout the Walt Disney Company. For more updates on the Disney layoffs, click here. And check back with us for the latest news.

Do you think Disney will be able to balance it all? Tell us in the comments.