ESPN (DIS) to Cut Jobs Amid Shift in Pay-TV Dynamics
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Price: $98.79 --0%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.9%
Revenue Growth %: +7.7%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.9%
Revenue Growth %: +7.7%
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ESPN is showing some chinks in its armor on reports Tuesday that it would be cutting some of its workforce.
The WSJ noted today that the move might be in response to higher fees the Disney (NYSE: DIS)-owned company is paying for rights to air games as well as other challenges throughout the industry.
Some reports have about 250 people being let go, a fraction of the some 7,000 that ESPN employs. The company issued a statement Tuesday, saying, "We are implementing changes across the company to enhance our continued growth while smartly managing costs...While difficult, we are confident that it will make us more competitive, innovative and productive."
Though ESPN commands some of the highest rates from pat-TV operators, its expenses are rising as well. Last year, the company and MLB struck a $700 million-per-year broadcast rights deal and ESPN is also paying about $1.9 billion each season for the right to air "Monday Night Football."
Consolidation in the pay-TV segment is another consideration for ESPN; it won't need as many staffers with fewer pay-TV distribution channels. ESPN is also moving to bring more of its content online, a process that might be less labor heavy in the long run.
Shares of Disney are indicated for a higher open Wednesday.
The WSJ noted today that the move might be in response to higher fees the Disney (NYSE: DIS)-owned company is paying for rights to air games as well as other challenges throughout the industry.
Some reports have about 250 people being let go, a fraction of the some 7,000 that ESPN employs. The company issued a statement Tuesday, saying, "We are implementing changes across the company to enhance our continued growth while smartly managing costs...While difficult, we are confident that it will make us more competitive, innovative and productive."
Though ESPN commands some of the highest rates from pat-TV operators, its expenses are rising as well. Last year, the company and MLB struck a $700 million-per-year broadcast rights deal and ESPN is also paying about $1.9 billion each season for the right to air "Monday Night Football."
Consolidation in the pay-TV segment is another consideration for ESPN; it won't need as many staffers with fewer pay-TV distribution channels. ESPN is also moving to bring more of its content online, a process that might be less labor heavy in the long run.
Shares of Disney are indicated for a higher open Wednesday.
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