Episode summary
Disney Plans Thousands of Layoffs, Targeting 20% Cost Savings | Bloomberg Intelligence
Bloomberg Intelligence
· · 15 min · Hosts: Paul Sweeney, John Tucker · Guests: Geetha Ranganathan, Anurag Rana, Michael Halen
Summary
Disney is moving toward thousands of layoffs as managers are told to target 20% annual cost savings, with the goal of reinforcing an earnings growth story heading into 2027. The analyst said the cuts are meant to support Disney’s promise of double-digit EPS growth, and that CEO Josh D’Amaro wants to redirect savings toward streaming, technology, film and TV programming, and the parks and cruise businesses. The analyst estimated the latest rounds of cuts could bring about $1 billion in annual savings, with roughly 2,000 jobs cut earlier this year and another similar amount potentially coming next.
The discussion also argued that Disney is unlikely to spin off its linear TV networks because ESPN, ABC and sports rights still create useful synergies and cash. The analyst said the networks remain in secular decline but still generate about $2.5 billion to $3 billion in cash, while Disney uses roughly 40% to 45% of marquee U.S. sports rights to differentiate its streaming product.
Apple’s earnings were presented as a mixed report: sales guidance for the holiday quarter was upbeat, but margin pressure from higher memory costs and Siri AI-related expenses overshadowed it. Yum! Brands was described as improving, with Taco Bell recovering after the cyclospora outbreak and same-store sales turning positive again, while Pizza Hut’s divestiture was framed as a positive for growth and profitability.
Key takeaways
- The analyst said Disney’s layoffs and other cuts are designed to protect a 2027 earnings growth target and fund streaming and parks reinvestment.
- Disney’s linear networks are still throwing off about $2.5 billion to $3 billion in cash, so the company is not rushing to spin them off, according to the analyst.
- The analyst estimated Disney’s latest job cuts could add up to about $1 billion in annual cost savings, with roughly 2,000 more jobs at risk.
- Apple’s holiday revenue guide of 7% to 10% was solid, but the analyst said higher memory costs and Siri AI spending will pressure gross margins over the next 12 months.
- Yum! Brands got a boost from Taco Bell’s recovery, with same-store sales up about 3% in the trailing four weeks, while Pizza Hut’s exit should improve growth and profitability.
Notable quotes
“they need to cut costs by I think we're talking 20% cut in annual cost savings through some job cuts and some other across the board stuff there”
“We think that these latest job cuts uh and the ones that you know the small targeted ones that Dearo announced ever since he took over uh should lead to at least about a billion dollars in cost savings”
“It still throws out about 2 and a half $3 billion of of cash just the just the linear TV networks”
“the margin story is the most important one and almost, you know, I would say over the last 6 to9 months, we've been talking about the impact of higher memory prices”
“we heard that that the recovery at Taco Bell really picked up in this in this last four weeks”
How the episode opens
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Listen on demand wherever you get your podcasts or watch us live on YouTube. Our good friends at the Walt Disney Company, they need to cut costs by I think we're talking 20% cut in annual cost savings through some job cuts and some other across the board stuff there. So times I guess a little tough there with Mickey Mouse.
Keith Ranganathan, she joins us here. She's the media analyst for Bloomberg Intelligence. Keith, what's Disney what's the strategy be behind trying to cut 20% of your costs here for Disney?
What are they trying to do here?
Yeah, thanks so much Paul. So I think there's really two things that they're trying to do. one is kind of really make sure that the setup for 2027 looks good.
Uh remember they had promised us doubledigit EPS growth into 2027. Uh that's after almost 16% EPS growth this year and this is really going to be uh you know I think investors are really looking at at the Walt Disney Company as an earnings compounder. Uh and so I think uh Josh Dearo, who's the new CEO and who who took over from Bob Iger in March of 2026, is really looking to kind of fortify that whole earnings growth story and that earnings narrative going forward.
And then longer term, I think, you know, the way that Josh is really looking at this business is he has his two growth engines. One is of course the main one is going to be the streaming uh business because that's really where they're looking to convert a lot of the revenue into earnings.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- disney layoffs
- cost savings outlook
- apple earnings
- siri ai assistant
- taco bell recovery
Companies and tickers mentioned
- DIS
- AAPL
- YUM
- Walt Disney Co.
- Apple Inc.
- Yum! Brands
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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