- CEO Bob Chapek says decision has been “accelerated” by Covid-19
- Kareem Daniel to now oversee all consumer products
- Comes after reports of ESPN cutting hundreds of jobs
US-based media giant Disney has revealed it is centralising its content distribution and advertising businesses into a single organisation as part of radical restructuring plans.
Speaking to CNBC, Disney chief executive Bob Chapek revealed that the media giant is “tilting the scale pretty dramatically” towards its streaming products, following a surge in digital signups during the coronavirus pandemic.
As part of the restructure, Disney has promoted Kareem Daniel, the company’s former president of consumer products, games and publishing, to oversee the new media and entertainment distribution group. Meanwhile, Rebecca Campbell will remain as chairman of Disney’s direct-to-consumer (DTC) and international division, reporting directly to Daniel for all things related to the company’s three core products: Disney+, Hulu+ and ESPN+.
ESPN president James Pitaro will also remain in charge of the US sports network amid upcoming and widespread changes.
Disney has experienced marked subscriber growth over the past 12 months, and notably since the launch of its Disney+ over-the-top (OTT) streaming service in December last year, having accrued more than 57 million paying customers, with 33.5 million of those subscribing since Q2.
Even without much live sport during that period, the company’s ESPN+ sports streaming service saw subscribers grow from 7.9 million in Q2 to 8.5 million three months later. Meanwhile, its Hulu streaming service has more than 35 million subscribers, up from 32.1 million in Q2.
“I would not characterise it as a response to Covid,” Chapek told CNBS. “I would say that Covid accelerated the rate at which we made this transition, but this transition was going to happen anyway.”
He added: “[Consumers] are voting with their pocketbooks, and they are voting very heavily toward Disney+. We want to make sure that we are going the way the consumers want us to go.”
Overall, Disney posted a record US$4.71 billion consolidated earnings deficit in Q3, including a drop in cable revenues of ten per cent to US$4 billion.
The company said at the time that it hoped that the return of major league sport, and notably the conclusion to the National Basketball Association’s (NBA) recent 2020 post-season, will see its ESPN business grow ad sales in Q4.
However, it appears that Disney has not weathered the downturn as well as it might have hoped to. According to a report by Front Office Sports (FOS), ESPN is preparing to lay off hundreds of staff in order to save tens of millions of dollars in salaries.
Chapek has since confirmed that the restructure could see some job losses across Disney’s media business. However, he added that it was unlikely to be on the same scale as the company’s parks division, which was forced to lay off up to 28,000 workers last month amid lengthy closures.