Shares in The Walt Disney Company (NYSE:DIS) tumbled in after-hours trading Tuesday after the world’s largest media entertainment company reported mixed third-quarter results. The company also announced the acquisition of a majority stake in BAMTech and that it was pulling its content from Netflix, Inc. (NASDAQ:NFLX). This sets the stage for Disney to launch its own Netflix-style direct-to-consumer Internet service for ESPN and Disney.
On August 8, DIS announced its financial results for the third quarter ended July 1, 2017. the company reported adjusted earnings per share of $1.58, on revenue of $14.23 billion. Analysts had forecast earnings of $1.55 per share on revenue of $14.4 billion. This also represents a two percent drop from adjusted earnings per share of $1.62 in the same prior-year quarter.
Disney also said it will be removing its content from Netflix starting in 2019 and will launch its own direct-to-consumer streaming service. To that end, it acquired a majority stake in BAMTech, a streaming-video company founded by Major League Baseball, for an additional $1.58 billion.
DIS said it will launch its own ESPN video streaming service in early 2018, followed by a new Disney-branded direct-to-customer service in 2019.
If you’ll recall, back in April, ESPN announced it was giving 100 employees, including on-air talent, pink slips. This came at a time when the stock price of DIS, ESPN’s parent company, was near all-time highs.
To add salt to the wounds of those laid off at ESPN, Disney CEO Robert Iger, said that Disney would continue to manage the company efficiently and, to do so, it would need to be mindful of the size and scale of its workforce.
Iger noted on the company’s second-quarter earnings call that that the 100 layoffs were not that significant, given that ESPN has 8,000 employees. “I don’t take it lightly but, the number gets these headlines … it wasn’t a particularly significant reduction.”
While the 1.25% reduction in the ESPN workforce may not seem like a major event to Iger, it still included a lot of recognizable names and faces. Moreover, one wonders how much of an impact the jettisoned jobs made on Disney’s overall efficiency.
Especially when you consider that DIS returned $7.1 billion to Wall Street investors in the form of dividends and stock repurchases. That’s $105.0 million more than the company paid out in the first nine months of fiscal 2016.
That’s considerably more than what the 100 fired employees made, assuming they each made less than $1.0 million.
“The Walt Disney Company Reports Third Quarter And Nine Months Earnings For Fiscal 2017,” The Walt Disney Company, August 8, 2017.
“John Skipper Message to ESPN Employees,” ESPN, April 2017.