During Disney’s earnings call on Tuesday, CEO Bob Iger found himself being asked several questions about ESPN and the recent layoffs that caused such a stir throughout the sports media world.
No one at Disney, or within ESPN had commented on the layoffs until Tuesday’s call.
“A lot has been said about cost reductions at ESPN,” Iger responded to one of the questions. “We’re managing that business efficiently. We always have, we always will. Obviously, there’s been a greater need to do it given challenges in the near term, but frankly what we’ve been doing, in terms of scale and size, is not that significant given that ESPN has 8,000 employees and we reduced by 100 employees. I don’t take it lightly but, the number gets these headlines … it wasn’t a particularly significant reduction.”
Those layoffs of 100 or so employees included on-air talent such as Trent Dilfer, Ed Werder and Jayson Stark. The network was reducing payroll as it faced a decline in subscribers while at the same time paying billions per year in rights fees for professional and college sports.
In Disney’s fiscal quarter ending April 1, the company’s cable division saw a 3% dip in profit to $2.2 billion led by declines at ESPN, where the network saw higher costs on broadcasting rights fees for NBA and college football games. The cable division’s revenue increased 3% to $4.06 billion, but that fell short of analysts’ expectations, just as Disney’s overall revenue came as something of a disappointment. The company reported that its quarterly revenue increased 2.8% to $13.3 billion, short of the $13.5 billion analysts had forecasted.
Disney’s overall quarterly profit rose 11.4% to $2.4 billion, as the company’s earnings per share of $1.50 beat forecasts for $1.41. Despite beating expectations on some fronts, Disney’s shares dipped in after-hours trading on Tuesday afternoon by more than 2.5%.
ESPN has been a drag on Disney’s overall numbers for several successive quarters. So, what is the source of Iger’s rosy outlook for it, considering nearly 100 recent job cuts, including a number of on-air personalities? First of all, the Disney noted on Tuesday that ESPN’s decline in the most recent quarter was “partially offset by affiliate and advertising revenue growth.”