Entertainment giant Disney (DIS) is laying off about 6% of its workforce, amounting to nearly 200 positions, across the ABC News Group and Disney Entertainment Networks units. The layoffs are part of the company’s ongoing efforts to streamline operations and reduce costs.
Apart from the job cuts, the company is also merging ABC News’ popular shows like “20/20” and “Nightline” into a single unit to improve efficiency. Also, the political and data-driven news site “FiveThirtyEight,” which employs around 15 people, is being shut down. Further, all three hours of its morning television show “Good Morning America” will now be produced by a single team, rather than separate teams handling each hour.
In the Disney Entertainment Networks unit, layoffs will target staff involved in program planning and scheduling across broadcast and cable networks such as Freeform and FX.
Key Reasons for Layoffs
The layoffs are part of DIS’ strategy to adapt to changing consumer preferences, such as the shift from traditional TV to streaming services, including Netflix (NFLX), Disney+, and Amazon’s (AMZN) Prime Video. These platforms are becoming popular as they offer convenience, lots of content, and no ads.
At the same time, Disney aims to cut rising operational costs and navigate tough competition in the entertainment business.
Top Analyst Bullish on DIS Stock
Amid Disney’s restructuring efforts, Top-rated analyst, Alan Gould from Loop Capital kept a Buy rating on Disney stock and raised the price target to $130 from $125, reflecting optimism about the company’s future.
The analyst believes that the upcoming release of “Snow White,” could boost Disney’s guidance and earnings estimates, if the movie performs well. Further, he noted that DIS’ streaming profits are rising faster than its losses in the traditional TV. This indicates that the company’s focus on growing its streaming unit is showing positive results.
Lastly, he expects the combined profits from streaming and traditional TV to beat the 2021 peak and keep growing. This points to a bright future for Disney’s profits.
Is Disney a Buy, Sell, or Hold?
Turning to Wall Street, DIS stock has a Strong Buy consensus rating based on 16 Buys and five Holds assigned in the last three months. At $129.68, the average Disney stock price target implies 18.96% upside potential.
