The Walt Disney Company’s Outlook: To 2018 and Beyond

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Part 6
The Walt Disney Company’s Outlook: To 2018 and Beyond PART 6 OF 10

Why Disney Is Looking at Layoffs at Its ABC Network

Layoffs at Disney’s ABC Network

In late August 2017, The Wall Street Journal reported that The Walt Disney Company’s (DIS) ABC Network is looking at layoffs in a bid to cut costs. The majority of layoffs are expected to occur at the ABC broadcast network, the company’s ABC production studio, ABC news network, and local television stations.

The report added that Disney’s other cable networks, including Disney Channel and Freeform, could also see a reduction in employees. According to the report, these layoffs are expected to represent 10% of ABC’s annual costs.

Why Disney Is Looking at Layoffs at Its ABC Network

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New content and reboots

In August, the video streaming service signed television producer Shonda Rhimes to produce new shows for Netflix. Rhimes has produced several hit television shows for Disney’s ABC Network, including ScandalGrey’s Anatomy, and How to Get Away with Murder.

ABC Network is trying to revamp its lineup with the launch of new television shows, rebooting old television shows like Roseanne, and producing new versions of hit shows like American Idol. The network was forced to overhaul its programming lineup as a result of declining program ratings.

As the chart above indicates, Disney’s Media Networks segment comprised 41% of the company’s total revenues of $14.2 billion in fiscal 3Q17.1

Why the layoffs?

The main reason for Disney’s ABC Network workforce reduction could be the increasing competition it is facing from video streaming services like Netflix (NFLX). Disney announced during its fiscal 3Q17 earnings call that it plans to launch a Disney-branded streaming service in 2019.

This intense competition has created a race for content among television networks and streaming services alike. Content seems to be king when it comes to attracting viewers to streaming services and television networks. This competition could also have intensified cost pressures on Disney’s ABC Network.

  1. fiscal 3Q17 ended July 1, 2017

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