The other shoe drops at Disney's Media Networks segment as massive layoffs anticipated at ABC TV and Disney Channels

ABC Television Group President Benjamin Sherwood is under fire as Disney
orders massive layoffs at ABC-TV after another disastrous year of ratings
Update 10/12/17:

The Disney/ABC Television Group, which includes ABC Entertainment, ABC Studio, the Disney Channel, Freeform, DisneyXD, and Disney Junior, but not ESPN, will begin eliminating about 200 jobs at ABC TV and the Disney's cable networks, according to inside sources with knowledge on the matter.

The same sources have also said that the company has started notifying employees of the layoffs, affecting mostly non-content and operational areas in the media networks division, such as finance in all the group's entertainment units.

The move comes at a strange time in the media industry when competitors, most notably Netflix, Apple, Amazon and other online streaming video services, are plowing more money into expanding television content.


In that same period, Disney's media networks have seen declining ratings and revenues slide across the board in all its media properties in the age of cord-cutting and digital disruption from the internet.

The media networks division is Disney's most largest and most profitable division generating nearly half of all revenues and a majority of the operating income for the whole multinational media conglomerate.


Original article:

A breakdown of the revenues by division within the Walt Disney Company
Plans to completely gut Disney's most profitable business segment, Media Networks, are now going into full swing as Disney insiders told the Wall Street Journal that ABC Television Group and the Disney cable channels are planning massive layoffs amid orders from Burbank to dramatically cut costs.

According to sources, Disney/ABC Television Group President Benjamin Sherwood told Disney CEO Bob Iger that he would shave about $300 million in costs in order to make ABC into "21st century broadcaster."

While exact number of staff that will be laid off has yet to be formally determined, insiders at Disney have told the Wall Street Journal that they estimate ABC Television Group alone will start by cutting over 300 jobs as part of its plan to reduce costs by a target goal of 10 percent a year. The exact numbers will be determined by the end of September.


Similar orders from Burbank to cut costs have been issued to Disney's various cable channels, including the Disney Channel, Freeform, Disney XD, Disney Jr., etc., which have also seen precipitous ratings drops and subscriber losses among its core audiences of children, teens and millennials.

Disney CEO Bob Iger ordered ABC to dramatically cut costs
And because Disney is a company that tries to hide bad news in one segment with good news in other segments for its shareholders, they will be either cutting back hours or laying off staff in their other business segments (i.e., Theme Parks & Resorts, Studio Entertainment, and Consumer Products & Digital Interactive) to try to lessen the impact of the bad news coming out Media Networks during upcoming quarterly earnings calls.

In what is considered a media preemptive strike to try to offset the bad news coming out of ABC, Disney announced yesterday it would donate a $1 million to Hurricane Harvey Relief efforts in its "Day of Giving" campaign today to try to deflect news away from its own disaster at ABC TV.


Disney previously ordered such deep cost-cutting measures at ESPN last March when the ailing cable sports unit began acknowledging a precipitous drop in subscribers and a fall in revenues last March.

Problems at ABC again renew speculations that Disney wants to sell ABC TV
Now the entire Media Networks segment, which includes ESPN, ABC TV, Disney cable channels, and other cable networks and accounts for nearly half of Disney's profits, will be affected by deep cost-cutting measures meant to restructure the heart of Disney's worldwide media empire.

All of Disney's broadcast media properties are struggling with alarming ratings and subscriber declines as viewership to traditional media outlets are being disrupted more and more by online, on-demand video streaming services, such as Netflix, Amazon, AppleTV, YouTube, and many others.

All these shocking moves to downsize at the House of Mouse are coming at a time when many of Disney's media competitors are plowing more money into original content.

Disney CEO Bob Iger announced earlier this month in the company's quarterly earning conference call that the House of Mouse will try to compete head-on against online streaming giants, like Netflix, by launching two of its own online "over-the-top" video streaming platforms to exhibit its own content; however, that announcement was largely met with anger and frustration from several of the other large media companies who were not prepared to join Disney in an all-out war against the Silicon Valley tech giants, such as Netflix, Apple, Google, and Amazon, who operate the vast majority of the online video streaming services. Needless to say, Disney may be going it alone in its battle against Silicon Valley.

ABC finished last in ratings among the big four broadcasting networks with the key demographic audience cherished by advertisers,  the 18-to-49 year old group, and rating fell by over 11 percent compared to the same time last year, according to A.C. Nielsen.


Lower advertising dollars and higher costs have caused ABC's revenues to fall by more than 22% over the last nine months.

The news of the dramatic cost savings measures come at a time when summer box office numbers and ratings are also sagging for the House of Mouse.

As expected, the bad news caused Disney shares to drop today as the troubles at ABC have reenergized rumors and speculation of Disney looking to sell off ABC.

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