Insiders are reporting that Disney-owned ESPN cable sports network is preparing to cut up to 350 jobs, causing it to shed about 4.3 percent of its workforce.
Inside sources say that the announcement of the cuts could be made as early as this Wednesday.
Disney already announced that its cable network earnings won’t meet company expectations. In fact, Disney has been signaling trouble with ESPN at least since early August.
As reported in the Wall Street Journal, Disney lowered expectations for its domestic cable affiliate revenue, citing subscriber numbers and foreign-exchange rates as factors. Disney said the new outlook would “push cable operating income growth for fiscal 2013 to 2016 down to mid-single digits from a previous forecast of high-single-digit growth.” Disney shares tanked after that announcement.
Disney also noted that another problem it faces is that as cable rates rise for the larger, all-inclusive packages, customers are opting for newer “skinny” bundles of channels that usually exclude ESPN. Additionally, many younger customers are opting for Internet-based entertainment, including video from such services as Netflix.
In August, Disney chief Bob Iger noted that the company was ready to take “radical” steps to fix the problem. Even as far back as July, Iger was noting that ESPN could be sold directly to customers instead of through cable providers.
ESPN has already made a few very public changes by eliminating high-priced talent like Bill Simmons and Keith Olbermann.
According to Bloomberg, the sports network commands the highest price per customer among basic cable channels and has lost more than 4 million subscribers since 2011.
ESPN still reaches nearly 100 million homes. But the loss of subscribers is a loss of up to $250 million in earnings per year.
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