The latest data for Disney-owned ESPN paints a dire financial picture for the sports network, with profitability falling 20 percent throughout the first nine months of the year. Despite engaging in cost-cutting initiatives such as a wave of layoffs, ESPN continues to endure financial struggles.
“Revenues for Disney’s sports division were $13.2 billion over the first nine months of fiscal 2023, a 1.3% drop compared to the same period in FY 2022 ($13.37 billion),” according to a report on Disney’s financials. Disney’s sports media business was reported to have an operating income of $1.48 billion as of July year to date compared to $1.85 billion during the same time frame last year.
The network has recently undergone a round of layoffs, firing a slew of high-profile personalities. Many top employees were axed, including Jalen Rose, Vince Carter, Keyshawn Johnson, Max Kellerman, Steve Young, Suzy Kolber, Rob Ninkovich, Chris Chelios, and Neil Everett, among others.
One of the significant trends impacting traditional television networks is “cord-cutting,” where millions of consumers are ditching their cable packages and opting to pay for streaming services instead. Accordingly, cable TV viewership dropped to a new low in July 2023, where broadcast and cable TV fell below 50 percent of total TV usage in the U.S. for the first time.
Simultaneously, fees associated with sports broadcasting are increasing as revenue-driving viewership is declining. For example, ESPN was forced to pay almost $3 billion for the right to broadcast Monday Night Football, playoff games, and other football-related events. This poses an existential threat to sports entertainment as we know it.
The American Tribune recently reported on Disney’s struggling financial performance, where the entertainment giant was losing $4 million every day and almost $1.5 billion annually. Additional reports indicate that current CEO Bob Iger, who returned to the company to revive its performance, is feeling “overwhelmed and exhausted” with the task of rebuilding the company.
In recent years, Disney has faced abysmal box office performance with its theatrical releases, its Disney+ streaming service has been hemorrhaging money, and park attendance has been lousy in the face of high levels of inflation.
Since resuming leadership at Disney, Iger has spearheaded cost-cutting initiatives of $5.5 billion with mass layoffs of approximately 7,000 employees. Year to date, Disney’s stock price is down roughly 5 percent, while the S&P is up around 13%. Disney’s investors have begun questioning Iger’s capacity to lead the company in the right direction.
Activist investor Nelson Peltz has been highly critical of Disney’s financial management in recent years, commenting the company’s performance is “resulting in a rapid deterioration in its financial performance from a consistent dividend-paying, high free cash flow generative business into a highly leveraged enterprise with reduced earnings power and weak free cash flow conversion.”
“Disney missed revenue projections and saw Disney+ subscriptions drop substantially in yet another blow for the reeling entertainment company. And with ‘Haunted Mansion’ a disastrous flop and declining park demand, it’s not getting better anytime soon,” Outkick tweeted.
Disney has also garnered a reputation for incessantly injecting a woke agenda into their content, possibly exacerbating the financial struggles as consumers put down their content.
