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.
STOCK PRICE FOR DIS
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:
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
