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The Walt Disney Company was in for a bit of a shock Wednesday as newly reinstalled chairman Bob Iger announced on an earnings call that the entertainment giant was axing 7,000 employees—or three percent of its workforce—in a bid to cut over $5.5 billion from its operating budget.

He also heralded a major reorganization that will give more authority to the company’s content executives and a heightened role to sports media.

Iger said he took the decision seriously:

“I have enormous respect and appreciation for the dedication of our employees worldwide,” he said. “While this is necessary to address the challenges we face today, I do not make this decision lightly.”

The moves come as Disney has faced an onslaught of negative press in the past year, as the company and its recently fired chairman Bob Chapek entered (some would say, started) a culture war with the state of Florida and its governor Ron DeSantis—and got soundly creamed. Meanwhile, its streaming service Disney+ has lost $10 billion dollars since its 2019 inception, and its increasingly woke entertainment content has experienced savagely negative reviews.

Disney stock has tumbled over 40 percent from its 2021 highs (although it rose slightly Wednesday after today’s news). The Wall Street Journal reports on why the returning CEO made these decisions:

Robert Iger announced the news in his first earnings call since returning as chief executive. In the wide-ranging call, Mr. Iger outlined plans for significant changes to the company’s slate of movies and television shows, the reinstatement of Disney’s dividend and possible changes in pricing for the company’s streaming video services, among other things.

Many of the moves signal the reversal of the approach taken by his predecessor, Bob Chapek, who was dismissed by the company’s board in November.

“It’s time for another transformation,” Mr. Iger said. He said the changes would reshape the company around creativity, reduce expenses and lead to profits in its streaming business.

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Increasing complications for Iger, the company is facing a challenge from investor Nelson Peltz, whose Trian Fund Management LP has launched a proxy campaign against Disney with the goal of adding Peltz to the board of directors. Peltz thinks the company has been overpaying for assets:

Trian thinks Disney has excessive compensation practices and lacks cost discipline, the people [executives at Trian] said. The firm is also critical of Disney management’s judgment in recent deal-making efforts, including by overpaying, in its view, for the assets of 21st Century Fox Inc. and bidding aggressively for pay-TV giant Sky PLC, the people said. Fox’s corporate sibling, News Corp, owns The Wall Street Journal.

What’s clear in all of this is that things are not going well at the Magic Kingdom. Iger in his previous stint showed that he was a remarkably effective executive, but it remains to be seen if he can clean up this mess. DeSantis’ team had some good advice for the happiest place on earth:

While we can go on about earnings in this sector and that sector, profitability margins, and stock buybacks, I don’t think Disney’s focus on wokeness can go overlooked when explaining its troubles. Many families simply no longer want to take their kids to the theme parks (which incidentally are now financially out of reach for many of them anyway), and more and more are canceling their Disney+ subscription when they discover some of the garbage that’s being peddled to their children:

Disney used to be for the regular person, the American family, the mom and dad who just wanted to enjoy some good old-fashioned magic and make memories with their kids.

Iger has worked wonders before, but he’s got his work cut out for him in saving the Mouse this time.

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