Disney to Cut Staff at ABC Television Group -- Update
August 30 2017 - 7:38PM
Dow Jones News
By Joe Flint
Walt Disney Co. is preparing significant budget cuts at its
Disney/ABC Television Group that will include staff reductions and
restructurings, people familiar with the matter said.
The bulk of the cuts are expected to take place at the ABC
broadcast network, its television production studio, ABC News and
local television stations. Cable networks Disney Channel and
Freeform will also likely see their workforces reduced as well, the
people said.
Overall, the cuts are expected to represent 10% of the unit's
annual costs and will identified by the end of September, which
concludes Disney's current fiscal year.
The Disney/ABC TV Group employs close to 10,000 people and is
looking to reduce employees through a combination of layoffs and
attrition, two people with knowledge of the situation said. The
total number of positions being eliminated could be as many as 300,
these people said.
The cable-sports unit ESPN, which is enduring its own tough
times with declining ratings and subscribers, is not part of the
Disney/ABC TV Group but has also endured employee reductions this
year.
The cuts are being orchestrated by Ben Sherwood, president of
the Disney/ABC TV Group. He had promised Disney Chief Executive
Robert Iger that he could shave up to $300 million in costs, one
person said. Mr. Sherwood has told staffers the unit has to
"transform into a 21st century broadcaster" and learn to do more
with less, according to an executive.
Details of where the cuts will come from and what will be
restructured are still being hammered out. Mr. Sherwood is expected
to present Mr. Iger a plan in the coming weeks.
The moves come as Disney's ABC broadcast network and its major
cable channels have struggled to find new hit shows. ABC finished
last season third in viewers behind CBS and NBC and was also down
11% in the adult 18-49 demographic that advertisers favor.
The Disney Channel and Freeform have endured similar declines in
ratings. Both have seen viewership fall by over 20% this year in
their respective target demographics.
Revenue for Disney's broadcasting division, which includes ABC
and ABC Studios as well as the local television stations the
company owns, is down a substantial 22% in the nine months ending
in June. Operating income is up 6% to $976 million. ABC has
reported lower advertising revenue this year and higher programming
costs, but has benefited from increases in payments from cable and
satellite distributors and the sale of shows to streaming outlets
including Netflix.
Disney does not break out earnings for its entertainment cable
networks, lumping them in with the far larger ESPN.
To be sure, the majority of traditional broadcast and cable
networks are experiencing declining ratings as newer platforms,
such as Netflix and Amazon Prime, lure viewers away. Last month
Disney announced plans to build its own direct-to-consumer
streaming service comprising primarily family-style programming
that is popular on the Disney Channel and to a lesser extent
Freeform.
--
Ben Fritz
contributed to this article.
Write to Joe Flint at joe.flint@wsj.com
(END) Dow Jones Newswires
August 30, 2017 19:23 ET (23:23 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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