It hasn’t been a good week for the entertainment industry. Two of media’s biggest names—the Walt Disney Company and Paramount Global—each announced layoffs this week. Both said they would cut hundreds of positions in efforts to reduce costs. Here’s what you need to know.
Paramount Global trims U.S. workforce
On Tuesday, Paramount Global announced it would begin Phase 2 of its workforce reductions in the United States, which the company announced and began earlier this year. There wasn’t a firm number offered as to how many employees would be let go, but Deadline reported it would at least be “several hundred.”
The company’s co-CEOs, George Cheeks, Chris McCarthy, and Brian Robbins, announced the commencement of Phase 2 of the layoffs in a memo to employees that was obtained by Fast Company.
“Like the entire Media industry, we are working to accelerate streaming profitability while at the same time adjusting to the evolving landscape in our traditional businesses. In order to set Paramount up for continued success, we are taking these actions, and after today, 90% of these reductions will be complete,” the executives wrote.
It is believed the Phase 2 layoffs will impact Paramount’s streaming organization more than other departments, Deadline reports. It also notes that last week Paramount’s advertising division also went through job cuts.
Previously, Paramount has said all phases of the current layoffs will see about 15% of its U.S. workforce go for a total of around 2,000 cuts. Paramount’s CEOs said its layoffs were 90% complete after this week’s cuts. They encompass a plan to help the company save half a billion dollars annually.
Disney lays off around 300 corporate workers
A day after Paramount’s most recent job cuts, Disney announced it would also cut its workforce. Deadline pegs the number of Disney staff let go this week to be around 300. All those laid off are based in the United States, with the layoffs impacting legal, finance, HR, and communications.
In a statement confirming the layoffs, a Disney spokesperson said, “We continually evaluate ways to invest in our businesses and more effectively manage our resources and costs to fuel the state-of-the-art creativity and innovation that consumers value and expect from Disney. As part of this ongoing optimization work, we have been reviewing the cost structure for our corporate-level functions and have determined there are ways for them to operate more efficiently.”
The latest layoffs come just days before Disney’s 2024 fiscal year concludes on September 30. However, while devastating for those affected, this week’s layoffs of 300 pale in comparison to the seismic impact that CEO Bob Iger had on the company’s workforce numbers when he returned in 2023 to helm the company again. At the time, Iger culled 7,000 positions in an effort to help save $5.5 billion.
But the 300 laid off this week aren’t the only Disney employees who have lost their jobs recently. In May, Pixar cut about 14% of its workforce and in July Disney Entertainment Television let go 140 workers.
Why are legacy media giants cutting jobs?
While 2023 and 2024 made headlines for massive job cuts across the tech industry, many forget that media companies have been aggressively cutting jobs for the sake of cost reductions for almost as long.
There are a few reasons for this—and both can be blamed on the shift to streaming. There’s hardly an entertainment giant left that does not have its own streaming service. But most of these services are so far unprofitable, contributing to losses quarter after quarter.
Meanwhile, the transition to streaming is also having an impact on legacy television—the former bread and butter for most of these companies. People today, especially younger generations, are abandoning legacy pay-TV services in droves. Fewer audiences mean advertisers are less willing to spend as much on advertisements. This is leading to reduced ad income for many media giants.
As a way to help stem the bleeding from unprofitable streaming and lower legacy TV ad revenue, many companies have implemented cost-cutting plans, which often means letting employees go.
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