Restructuring efforts at The Walt Disney Company's (NYSE:
) Disney Interactive online unit has resulted in 50 employees
losing their jobs
after the plan was completed on Wednesday.
The layoffs are exclusive to the online unit of Disney
Interactive and did not include the company's video game group. The
company has struggled for years to earn a profit with this group
and has reported operating losses of more than $40 million, despite
having narrowed the losses from $86 million during its second
Conversely, the media networks division has shown strong growth
driven primarily by
and the company's ESPN division, which earns the highest
subscription fees of any cable channel available.
The May release of The Avengers also far exceeded revenue
expectations. The movie has gained more press as of late since the
announcement that Amazon (NASDAQ:
) would be offering the film, among others, to subscribers in an
effort to gain more share from Netflix (NASDAQ:
This is the second round of layoffs Disney Interactive has
experienced in less than two years, as the company announced 200
layoffs in January 2011 in "reorganization" efforts. Employees will
hope to return based on the anticipated success of the company's
November 18 release of "
Disney Epic Mickey 2: The Power of Two
", which may help the Interactive section regain some traction in
the revenue marketplace.
It appears the success of Disney's Interactive division not only
depends on its upcoming releases, but also on its partnerships with
) to provide relevant online experiences and new video games,
Disney's other divisions seem healthy, as ESPN has extended the
Major League Baseball contract through 2021. The company reported
positive earnings in early August for its second quarter, showing
an 18 percent increase in operating income thanks to The Avengers,
a welcome addition to an already solid balance sheet.
Second quarter earnings per share (
) reports of
$1.01 beat consensus estimates of $0.93
and total revenues came in slightly lower-than-expected ($11.088
billion versus $11.305 billion estimate) but overall, Disney is a
strong company that can only stand to gain from continued positive
Success from the November releases in the company's Interactive
division and established partnerships can only prove accretive for
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