ESPN, Olbermann part ways once more.

[IceCap]

Story is out today that ESPN has been told to slash costs in a major way. Could be a big factor in letting Olbermann (and Simmons) go.

http://www.businessinsider.com/cost-cutting-is-coming-to-espn-2015-7

So penny-wise pound-foolish profit seeking or is the specter of cable cutting/a la carte cable starting to get Disney and its investors nervous?

My understanding, from talking to a guy in the know, is that Disney's executives are unwilling actually re-invest the company's earnings back into the company.

It seems really weird. It's just what I've heard.

[sportzfan]

Story is out today that ESPN has been told to slash costs in a major way. Could be a big factor in letting Olbermann (and Simmons) go.

http://www.businessinsider.com/cost-cutting-is-coming-to-espn-2015-7

So penny-wise pound-foolish profit seeking or is the specter of cable cutting/a la carte cable starting to get Disney and its investors nervous?

My understanding, from talking to a guy in the know, is that Disney's executives are unwilling actually re-invest the company's earnings back into the company.

It seems really weird. It's just what I've heard.

That is one of the biggest mistakes a company can make. If a company does not reinvest in its product it will ultimately fail by being overtaken by its competitors. For a company like Disney it would take many years but there will at least be a decline in the near future for them if they follow that business strategy.

[rams80]

Story is out today that ESPN has been told to slash costs in a major way. Could be a big factor in letting Olbermann (and Simmons) go.

http://www.businessinsider.com/cost-cutting-is-coming-to-espn-2015-7

So penny-wise pound-foolish profit seeking or is the specter of cable cutting/a la carte cable starting to get Disney and its investors nervous?

My understanding, from talking to a guy in the know, is that Disney's executives are unwilling actually re-invest the company's earnings back into the company.

It seems really weird. It's just what I've heard.

That is one of the biggest mistakes a company can make. If a company does not reinvest in its product it will ultimately fail by being overtaken by its competitors. For a company like Disney it would take many years but there will at least be a decline in the near future for them if they follow that business strategy.

They don't teach that in business school anymore.

[dfwabel]

Story is out today that ESPN has been told to slash costs in a major way. Could be a big factor in letting Olbermann (and Simmons) go.

http://www.businessinsider.com/cost-cutting-is-coming-to-espn-2015-7

So penny-wise pound-foolish profit seeking or is the specter of cable cutting/a la carte cable starting to get Disney and its investors nervous?

My understanding, from talking to a guy in the know, is that Disney's executives are unwilling actually re-invest the company's earnings back into the company.

It seems really weird. It's just what I've heard.

When nearly $200M was spent last year on Digital Center 2, I beg to differ with that assessment.

Their TV advertising revenue had been flat from Q1 2012 until Q1 of this year when the College Football Playoff aired. While it is between 25-30% of their revenue, little to zero growth over 3.5 years is telling when they have large digital advertising revenue increases in those same years, they are nowhere near enough to offset the TV ad revenue losses.

[IceCap]

Story is out today that ESPN has been told to slash costs in a major way. Could be a big factor in letting Olbermann (and Simmons) go.

http://www.businessinsider.com/cost-cutting-is-coming-to-espn-2015-7

So penny-wise pound-foolish profit seeking or is the specter of cable cutting/a la carte cable starting to get Disney and its investors nervous?

My understanding, from talking to a guy in the know, is that Disney's executives are unwilling actually re-invest the company's earnings back into the company.

It seems really weird. It's just what I've heard.

When nearly $200M was spent last year on Digital Center 2, I beg to differ with that assessment.

Their TV advertising revenue had been flat from Q1 2012 until Q1 of this year when the College Football Playoff aired. While it is between 25-30% of their revenue, little to zero growth over 3.5 years is telling when they have large digital advertising revenue increases in those same years, they are nowhere near enough to offset the TV ad revenue losses.

I'm just passing along something I heard from someone who would be in a position to know what's going on. Take it for what that's worth.

[Cosmic]

Story is out today that ESPN has been told to slash costs in a major way. Could be a big factor in letting Olbermann (and Simmons) go.

http://www.businessinsider.com/cost-cutting-is-coming-to-espn-2015-7

So penny-wise pound-foolish profit seeking or is the specter of cable cutting/a la carte cable starting to get Disney and its investors nervous?

My understanding, from talking to a guy in the know, is that Disney's executives are unwilling actually re-invest the company's earnings back into the company.

It seems really weird. It's just what I've heard.

That is one of the biggest mistakes a company can make. If a company does not reinvest in its product it will ultimately fail by being overtaken by its competitors. For a company like Disney it would take many years but there will at least be a decline in the near future for them if they follow that business strategy.

If you want to see this slowly happening, look at what Universal has done in Orlando. Disney was resting on its laurels and still licking its wounds from 9/11 in the mid-00s; Universal hit big with the Harry Potter franchise in its parks, and they've turned that into solid momentum ever since. Their attendance is up almost 50% since 2008, and their per capita guest spending is great. There are very strong rumors that there's been substantial budgets approved for Disney World projects, though, so I am hopeful that Disney will get its act together in Florida.

I follow the theme park side of Disney pretty closely, and the other divisions somewhat. I think it's probably a combination of general stinginess combined with some fear for ESPN in the near future. Disney is run right now the way Wall Street likes. It doesn't matter how much money you made last year; you need to make 10% more the next year. They have spent billions upon billions in recent years on stock buybacks, instead of using that money to invest in their businesses. Stock buybacks increase the stock price, and the top executives get paid large amounts of stock options. Capital investment in the theme park side has been very low under the CEO when compared to the company's history; this is even during a time when there are major initiatives like Shanghai Disneyland and new cruise ships... they have no problem coasting where they think they can.

But if it was just general cheapness, why has ESPN been spared for so long? The theme parks were cut to the bone 20 years ago... until people died. Is it possible that ESPN got more free reign on spending because they were just raking in ungodly amounts of cash regardless? I'm sure they were to some extent, but like I said... it doesn't matter how much you make, you need to make more. I'd be surprised if the executives saw what they thought was a ton of bloat in ESPN and just let it slide for years. I think it has to be, in large part, a storm on the horizon. I've heard people mention the rising cost of broadcast packages (I don't really follow that beat, but I've heard B1G and NBA are up soon?) and also the cord-cutting or a la carte attrition. The CEO is a bit of a technophile; he wanted to put movies on mobile devices and in living rooms day-and-date with the theatrical releases until the theater owners flung enough poo at him. He's also a guy who came up through ABC. I could see him being very aware of how ESPN's business model will be changing in the future.