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Disney's ESPN Reportedly Cutting Staff to Invest More in Streaming

Walt Disney (NYSE: DIS) sports television brand ESPN has plans to cull its current headcount by 300 employees, according to the New York Post, as it reshapes itself for a more digital age.

The news website of the New York newspaper published what it says is an internal memo from ESPN president Jimmy Pitaro sent to workers on Thursday. In it, Pitaro explains the company has "reached an inflection point" of changes within the world of television media.

This change is predominantly the advent of streaming video as an alternative to traditional cable TV service, forcing media companies to adapt. The nation's cord-cutting movement has reduced the number of cable-subscribing households from more than 100 million as of 2014 to what eMarketer believes will be less than 78 million cable television customers by the end of this year.

Image source: Getty Images.

This shift has taken a toll on all of Disney's cable TV venues, but as ESPN's carriage fees are believed to be the highest in the business, the country's shrinking cable television industry is taking an outsized toll on ESPN's portion of Walt Disney's top and bottom lines.

Disney is contributing to this headwind. Its popular streaming product Disney+ now boasts more than 60 million subscribers, while sports-minded ESPN+ is serving more than 8 million viewers. ESPN+ does not carry the same content as the cable TV version of ESPN does, but the company could be moving in this direction. Pitaro's memo went on to say "placing resources in support of our direct-to-consumer business strategy, digital, and, of course, continued innovative television experiences, is more critical than ever."

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James Brumley has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney. The Motley Fool has a disclosure policy.


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