Corporate- What to do with ESPN

ESPN. A strong business that is the thought leader and brand identifier for all sports programming. ESPN was bought in the 1990's when Disney bought Capital Cities, giving majority control of ESPN to Disney. The company (and its revenue) really took off in the early 2000's and continued throughout the decade. When ABC was struggling in the 1990's and when tourism at the parks struggled following 9/11, it was ESPN that saved the company more than any other part. ESPN was a solid producer for years...until they weren't. A few years ago technology has increased so that fewer subscribers continue memberships and prices for sporting rights continue to increase, creating a serious decline in revenue. So what should Disney do about this and what has Disney done about this? Let's start with the latter.

Disney has had two rounds of mass layoffs at ESPN and the future does not look any brighter. However, this might make good business sense for the foreseeable future, it fails to take the long term view into account. If this trend continues, Disney will likely sell off its stake in ESPN. That would just be wrong...so what should Disney do?

Disney should stop listening to the MBA's here. Traditional finance in a mega company such as Disney dictates that each subsidiary under the company umbrella must be independently profitable. However, the Disney company does not operate its businesses independently; the success of the company promotes and leverages cross pollination (a movie spurns a park attraction which spurns a tv show and merchandise, etc.). They all work together in a holistic way. When things go well, every subsidiary wins. However, when things are going bad, the company is seeking to stop the bleeding immediately at all costs. Instead of focusing on immediate course correction within the subsidiary, the parent company should seek to leverage the other subsidiaries in order to outlast and make appropriate corrections without drastic changes.

So what does this mean for Disney and ESPN? Be patient and give it time. Have ABC hold more ESPN promotional events, have Walt Disney World host some major event (i.e. not high school gymnastics) at Wide World of Sports. Continue to update technology to provide more options, but don't lose focus that ESPN is a worldwide brand for sports. These cuts (and possible divestment) will only hurt the Disney brand. Disney currently owns the concept of sports by owning ESPN, that is worth an awful lot and should be taken into consideration.

A family looks out for one another. When your sibling is struggling, the family must pull together in the tough times...layoffs and cost cutting are not the answer.