Walt Disney Co will withstand ESPN president's departure

Just days after Walt Disney Co completed a blockbuster media deal for most of the TV and movie studio assets of Twenty-First Century Fox Inc, ESPN president John Skipper has announced his resignation due to substance addiction.

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Skipper's resignation caught employees and sports fans by surprise, but Disney investors seem to be taking Skipper's departure in stride as the company enters a critical two-year stretch.

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Skipper, who has been president of ESPN since 2012, informed ESPN employees of his departure on Monday via email. "I have struggled for many years with a substance addiction," Skipper says in a statement. "I have decided that the most important thing I can do right now is take care of my problem."

Disney CEO Bob Iger:

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HOLLYWOOD, CA - DECEMBER 10: The Walt Disney Company Chairman and CEO Bob Iger attends the premiere of Walt Disney Pictures and Lucasfilm's 'Rogue One: A Star Wars Story' at the Pantages Theatre on December 10, 2016 in Hollywood, California. (Photo by Frazer Harrison/Getty Images)
UNITED STATES - CIRCA 1980: Bob Iger; 4th Annual Friends Finding A Cure Gala Benefiting Project ALS; Walt Disney Studios, CA; 04/29/2004 (Photo by Vinnie Zuffante/Getty Images)
UNITED STATES - MARCH 12: Bob Iger and Willow Bay attending Key To Life Gala at Pierre Hotel. (Photo by Richard Corkery/NY Daily News Archive via Getty Images)
Bob Iger during 4th Annual Friends Finding A Cure Gala Benefiting Project ALS at Walt Disney Studios in Burbank, California, United States. (Photo by Gregg DeGuire/WireImage)
WEST HOLLYWOOD, CA - MAY 8: Disney's Bob Iger and writer/producer Mark Zakarin pose at the afterparty for the premiere of Miramax's 'Keeping up with the Steins' at the Pacific Design Center on May 8, 2006 in West Hollywood, California. (Photo by Kevin Winter/Getty Images)
Bob Iger, President and CEO of The Walt Disney Cie attends the ceremony to honor movie mogul Michael D. Eisner by a star on the Hollywood Walk of Fame in Hollywood, California, April 25, 2008. AFP PHOTO GABRIEL BOUYS (Photo credit should read GABRIEL BOUYS/AFP/Getty Images)
LOS ANGELES, CA - SEPTEMBER 25: Disney's Bob Iger arrives at the National Multiple Sclerosis Society's 34th Annual Dinner of Champions held at the Hyatt Regency Century Plaza Hotel on September 25, 2008 in Los Angeles, California. (Photo by Alberto E. Rodriguez/Getty Images)
Robert 'Bob' Iger, president and chief executive officer of Walt Disney Co., leaves the morning session at Sun Valley, Idaho, U.S., on Wednesday, July 6, 2011. Media executives gather at Allen & Co.'s Sun Valley conference this week looking to shed assets such as the Hulu LLC video website and G4 game channel amid a declining global stock market and slowing economic growth. Photographer: Peter Foley/Bloomberg via Getty Images
NEW YORK, NY - NOVEMBER 14: Bob Iger, chairman and chief executive officer of Walt Disney Co. attends Unveiling Moment At Barneys New York & Disney Electric Holiday Spectacular With Sarah Jessica Parker, Bob Iger, and Mark Lee on November 14, 2012 in New York City. (Photo by Dimitrios Kambouris/Getty Images for Barneys New York)
BEVERLY HILLS, CA - APRIL 04: Chairman and CEO of Conservation International Peter Seligmann and Chairman and CEO of the Walt Disney Company Bob Iger attend Conservation International's 17th Annual Los Angeles Dinner at Montage Beverly Hills on April 4, 2013 in Beverly Hills, California. (Photo by Alberto E. Rodriguez/WireImage)
Robert 'Bob' Iger, chairman and chief executive officer of Walt Disney Co., arrives at the Sun Valley Lodge ahead of the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, U.S., on Tuesday, July 8, 2014. Billionaires, chief executive officers, and leaders from the technology, media, and finance industries will gather this week at the Idaho mountain resort conference hosted by investment banking firm Allen & Co. Photographer: Scott Eells/Bloomberg via Getty Images
NEW YORK, NY - MAY 12: Bob Iger, chairman and CEO of The Walt Disney Company attends the dedication ceremony as ABC News headquarters in New York is proclaimed 'The Barbara Walters Building' ABC News Headquarters Dedication Ceremony on May 12, 2014 in New York City. (Photo by Slaven Vlasic/Getty Images)
Robert 'Bob' Iger, chief executive officer of The Walt Disney Co., arrives for a morning session during the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, U.S., on Friday, July 10, 2015. Billionaires, chief executive officers, and leaders from the technology, media, and finance industries gather this week at the Idaho mountain resort conference hosted by investment banking firm Allen & Co. Photographer: David Paul Morris/Bloomberg via Getty Images
Walt Disney Company chairman and CEO Bob Iger speaks in front of a model of the new Shanghai Disney Resort during a press event in Shanghai on July 15, 2015. US entertainment giant Disney gave the first detailed preview to the media for its planned theme park in Shanghai, promising Chinese features and new attractions unlike its five other resorts, executives said. AFP PHOTO / JOHANNES EISELE (Photo credit should read JOHANNES EISELE/AFP/Getty Images)
BOULDER, CO - SEPT 1: THESE PHOTOS ARE EMBARGOED UNTIL 12:01 A.M. FRIDAY, SEPT. 4, 2015. DO NOT PUBLISH UNTIL THEN. Sphero CEO Paul Barbarian show's off his company's new robotic toy based on the droid BB8 from the upcoming new movie Star Wars: The Force Awakens. Disney president Bob Iger asked the Boulder company to make the toy based on the character from the movie which opens in theaters on Dec. 18, 2015. (Photo by Kathryn Scott Osler/The Denver Post via Getty Images)
Chairman and CEO of Walt Disney Bob Iger holds a press conference at Shanghai Disney Resort in Shanghai on June 15, 2016. The Magic Kingdom comes to the Middle Kingdom this week when Disney opens its first theme park in mainland China, betting the growing middle class will spend big on leisure despite a slowing economy. / AFP / JOHANNES EISELE (Photo credit should read JOHANNES EISELE/AFP/Getty Images)
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Skipper's departure is reportedly unrelated to Disney's recent acquisition of 22 of Fox's regional sports networks. Last month, Disney performed yet another round of layoffs at ESPN as the sports network struggles to hold onto subscribers. ESPN has lost more than 10 million subscribers in the past several years and has now eliminated more than 500 jobs since 2015 in an effort to cut costs.

Disney is reportedly planning on launching a standalone ESPN streaming service in 2018 that is separate from the TV and movie streaming service it is planning to launch in 2019. Last week, CNBC analyst Jim Cramer said the Fox deal eliminated Disney's ESPN problem.

"This is a subscriber story, and we've had subscriber growth go down, which was ESPN," Cramer said. "Suddenly, you put all the subscriptions together, and they can show up numbers."

Rosenblatt Securities analyst Alan Gould says Fox's sports assets could end up being a liability for Disney when it comes to convincing regulators to approve the buyout deal. "We believe there is a high likelihood of the deal passing regulatory scrutiny with the possible exception of the regional sports networks, which would be DIS's issue to remedy," Gould says.

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Gould says Disney would have no problem finding buyers for Fox's sports assets to please regulators, and Comcast Corp would likely be at the front of the line of potential buyers.

ESPN said former president George Bodenheimer will take over for Skipper while the company searches for a permanent replacement. Disney's stock traded mostly flat on Monday following the news. Rosenblatt has a "neutral" rating and $115 price target for DIS stock.

Copyright 2017 U.S. News & World Report

 

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