Heemang Parmar

The Walt Disney Co. said Wednesday that it would lay off about 7,000 employees and cut costs by $5.5 billion in the coming months.

Newly returned CEO Bob Iger announced the “strategic reorganization,” saying cuts would amount to about 3.6% of its global workforce. The effort is meant to increase the profitability of Disney’s streaming business, and Iger said Wednesday the company would focus more on core brands and franchises.

Disney owns the likes of Marvel, the “Star Wars” franchise and Pixar, all major drivers of revenue and fandom.

“We must return creativity to the center of the company, increase accountability, improve results and ensure the quality of our content and experiences,” Iger said during a call Wednesday. “Our new structure is aimed at returning greater authority to our creative leaders and making them accountable for how their content performs financially.”

The plan came amid vocal concerns from an activist investor, concerned the company was focusing too heavily on streaming. The company’s Disney+ service ended the latest quarter with nearly 162 million subscribers, but its direct-to-consumer business still posted a $1.1 billion operating loss.

Iger maintained Wednesday that the streaming business will be profitable by mid-2024.

The move is a dramatic turn for the company after Iger returned to the helm in November. The Disney board fired his predecessor, Bob Chapek, and reinstated him to the top position after he served as CEO from 2005 to 2020.

“While this is necessary to address the challenges we’re facing today, I do not make this decision lightly,” Iger said during a call with reporters Wednesday, according to Axios. “I have enormous respect and appreciation for the talent and dedication of our employees worldwide, and I’m mindful of the personal impact of these changes.”

The layoffs are the latest in a string of cutbacks at major tech companies. Giants including Google, Amazon and Facebook have all announced drastic cuts amid concerns about a post-COVID recession and a pullback in consumer spending.