By Joe Flint 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (December 19, 2017).

ESPN on Monday announced the surprise resignation of network President John Skipper over substance-abuse issues, creating uncertainty at a critical moment for the sports TV juggernaut and its majority-owner, Walt Disney Co.

George Bodenheimer, Mr. Skipper's predecessor as head of ESPN, will return to the company as acting chairman for three months while a search for a permanent successor is completed.

"I have struggled for many years with a substance addiction. I have decided that the most important thing I can do right now is to take care of my problem," Mr. Skipper said in a statement. "I have disclosed that decision to the company, and we mutually agreed that it was appropriate that I resign."

Mr. Skipper's sudden departure creates a challenge for Disney Chief Executive Robert Iger just a few days after the entertainment giant announced a $52.4 billion deal to acquire assets from 21st Century Fox, including 22 regional sports networks that Mr. Skipper would have been responsible for integrating into ESPN.

Without Mr. Skipper, the already difficult task of remaking ESPN for the digital era could be even more arduous. The network is trying to recalibrate its long-profitable TV business for a media environment in which more consumers are cutting back on cable-TV subscriptions and turning to streaming services.

The network's next leader will be responsible for launching a new streaming service this spring called ESPN Plus, which will air sporting events that don't appear on the cable-TV network, including baseball and hockey games. And the new president will inherit a workforce that is uneasy after several rounds of layoffs.

"It's a big deal," said sports-industry consultant Marc Ganis of Mr. Skipper's exit. "John has been a major part of the planning for Disney's digital initiative and streaming services, while at the same time dealing with cord-cutting and cost-cutting as well as ESPN's role in society as a journalistic entity."

Mr. Skipper's situation caught his superiors off guard, a person familiar with the situation said. Just last month he signed a contract extension that was to have run through 2021, and last week he ran a day-long gathering of ESPN's on-air talent at the unit's headquarters in Bristol, Conn.

Mr. Iger said in a statement that he wished Mr. Skipper well "during this challenging time."

Mr. Skipper, who was also co-chairman of the Disney Media Networks unit, is the second prominent Disney executive in recent weeks to be sidelined by personal issues. Last month, John Lasseter, creative chief of Disney's animation units, took a six-month leave of absence after apologizing for inappropriate behavior with staffers. Messrs. Skipper and Lasseter have been considered to be two of Disney's most important creative executives.

Internally at ESPN, the two executives seen as candidates to succeed Mr. Skipper are Justin Connolly, who oversees distribution and marketing for ESPN, and Connor Schell, who is in charge of content for ESPN's platforms.

Mr. Skipper, who turns 62 on Tuesday, joined ESPN in 1997 as a senior vice president and general manager of ESPN The Magazine, after earlier stints at Rolling Stone and Spin. He rose through the ranks on the editorial side. He became president of ESPN in 2012.

The past several years have proved challenging for ESPN. It has been particularly hard hit by cable and satellite subscribers cutting the cord to their pay-TV services or trading down to slimmer packages. Mr. Skipper on many occasions has nevertheless pointed out the risks of ESPN moving too quickly away from its traditional business.

"We are still engaged in the most successful business model in the history of media, and see no reason to abandon it," he told The Wall Street Journal last year.

ESPN currently has just over 87 million subscribers, a drop of 13 million from six years ago, according to Nielsen. Subscriptions are ESPN's main revenue driver. Its flagship channel costs pay-TV distributors $8 a month per subscriber, the most of any network, according to SNL Kagan, an industry research firm.

ESPN continued to lose subscribers in the quarter ended Sept. 30. While price increases helped lift subscription revenue, ad revenue declined and programming costs grew, contributing to a 1% decline in operating income at Disney's cable-TV unit, which also includes Disney's entertainment channels.

In response to its issues, ESPN has been cutting staff. Last month, ESPN laid off 150 employees, mostly in studio production technology and digital content. Earlier this year, it cut 100 employees, including some well-known members of its on-air roster. ESPN employs approximately 8,000 people.

Besides having to confront a changing media landscape, Mr. Skipper had his fair share of controversies on the editorial side. Most recently, "SportsCenter" host Jemele Hill was suspended for violating the network's social-media policy because of comments she made on Twitter regarding NFL players' national-anthem protests. Ms. Hill was among many ESPN employees who publicly expressed thanks to the executive upon his departure.

In October, Mr. Skipper backtracked from a programming agreement ESPN struck with Barstool Sports, a website whose president had previously made sexist statements about an ESPN host. The Barstool experiment ended after one episode.

The return of Mr. Bodenheimer, who retired in May of 2014 after 33 years at ESPN and is well-versed in its operations, will give Disney some breathing room in naming a successor to Mr. Skipper.

The 59-year-old took a different path to the top of ESPN, starting as a driver in the company's mailroom in 1981, just two years after the network launched. A low-key executive, he climbed the ladder on the business side and played an important part in orchestrating ESPN's rise from a single channel to a global powerhouse. Mr. Bodenheimer focused much of his efforts building ESPN's distribution.

--Ben Fritz contributed to this article.

Write to Joe Flint at joe.flint@wsj.com

 

(END) Dow Jones Newswires

December 19, 2017 02:47 ET (07:47 GMT)

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