The Magic Kingdom seems decidedly less magic nowadays.
First, Disney’s sports propaganda wing, ESPN, sheds over 100 employees in response to the network’s numerous political and structural failings, and now we bring news that despite ESPN’s attempts to better the bottom line through layoffs, the network is still destroying Disney’s stock value.
According to Reuters, “A decline in subscribers and higher programming costs at cash-cow ESPN weighed on shares of Walt Disney Co (DIS.N) on Tuesday, overshadowing a quarterly profit that topped Wall Street estimates.
“Investors have been closely watching how ESPN navigates the shakeup in television as viewers defect from traditional pay TV services and online services proliferate. Chief Executive Bob Iger told analysts that Disney added customers on new digital platforms, but not enough to make up for subscriber losses from expanded basic cable packages.
“Shares of the world’s biggest entertainment company dropped 2.4 percent in after-hours trading.”
Exacerbating ESPN’s hemorrhage of cash and subscribers is the exorbitant cost of sports programming packages. Specifically, ESPN’s contract with the NBA.
According to Reuters, “ESPN lost subscribers during the quarter and was hit with higher programming costs, in part due to a new, more costly NBA contract, Disney said in its earnings report. Fewer subscribers means less revenue for ESPN, which is locked into sports programming contracts for several years.
“Lower numbers of people paying for television is a big problem for ESPN, given the cost structure they have with sports rights over the next several years,” said BTIG analyst Richard Greenfield.
Iger said Disney was adapting quickly to the changing TV marketplace and was encouraged by consumer interest in digital services that feature ESPN, such as Dish Network Corp’s (DISH.O) Sling TV and Sony Corp’s (6758.T) PlayStation Vue.
“The substantial growth we’re already seeing makes us bullish on the future of these nascent offerings,” Iger said. “Right now, they’re a small part of the pay TV universe, but we believe they’ll be a much bigger part of the business going forward.”
Of course, the future that Iger is most bullish on is his own.
As we reported last week, Disney’s CEO Bob Iger has piqued the interest of liberal Hollywood elites when it comes to the 2020 presidential election. This goes a long way towards explaining why ESPN personalities have been given carte blanche to criticize conservatives, with no fear of repercussion whatsoever.
In reality, Iger has used ESPN to curry favor with the radical leftists in Hollywood who are recruiting him to run for president, with no apparent regard for the fact that the network has become a poorly run, poorly structured, and antiquated cable dinosaur.
To Iger, ESPN amounts to nothing more than a presidential campaign loss-leader. A sacrificial band of useful idiots who, while nuking their own careers by alienating the American sports fan will eventually help pave the way for multimillion-dollar campaign donations from California’s most radical leftist billionaires.
What a guy.
Follow Dylan Gwinn on Twitter: @themightygwinn