Sara Fischer Feb 8, 2017
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ESPN is Disney's black sheep

Greg Ruben/Axios

Walt Disney shares fell more than 1.5% after investors learned the full scope of ESPN's troubles. How bad is it?

  • Revenue: Disney's Media Networks unit, led by the ESPN franchise, saw revenues fall 2% to $4.4 billion,vs investor expectations of $4.53 billion. Disney CEO Robert Iger faulted ESPN for the revenue decline, citing a loss in advertising dollars combined with an increase in production costs for a new NBA agreement and contractual rate increases for NFL programming.
  • Subscriptions: ESPN lost more 2 million subscribers in FY 2016, bringing their total subscriber number to 90 million, down 10% from 2011. According to Nielsen, ESPN lost over half of a million subscriptions in November 2016 alone and the pattern extends across the board to ESPN2 and ESPNU.
  • Advertising: ESPN's ad revenue was down 7% in Q4. Disney executives blame the decline on lower impressions and rates, both of which they say were impacted by a timing shift of college football playoff games. So far this quarter however, ESPN's ad sales are pacing up compared to last year.

What's next: Expect to see more ESPN content provided through streaming services, like Hulu and Netflix, in 2017. Iger told investors that his confidence in ESPN lies in deals the network has made with OTT (over the top) streaming service providers, like Hulu. He also conceded to investors that the standard advertising model ESPN and other Disney-owned networks rely on is no longer working.

Why it matters: Disney executives are acutely aware of how much "cord-cutting" — people ditching cable subscription packages for streaming services — is affecting their business, which is why they are taking strategic steps to pivot their strategy to streaming. In the call with investors, Iger touted Disney's $1 billion investment in MLB's streaming division called BamTech, which they have previously said will work with Disney to create an ESPN-branded subscription streaming service.

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Trump: Transgender people "disqualified" from the military

SecDef Jim Mattis and Gen. Joseph Dunford.
Secretary of Defense Jim Mattis and Gen. Joseph Dunford. Photo: Andrew Harrer-Pool / Getty Images

President Trump late Friday issued an order disqualifying most transgender people from serving in the military.

"[T]ransgender persons with a history or diagnosis of gender dysphoria -- individuals who the policies state may require substantial medical treatment, including medications and surgery -- are disqualified from military service except under certain limited circumstances."

Why it matters: Anything short of an inclusive policy for transgender troops will be viewed as a continuation of the ban Trump announced on Twitter in August.

Haley Britzky 3 hours ago
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Both Bush and Obama also requested line item veto power

Donald Trump.
Photo: Mark Wilson / Getty Images

President Trump tweeted on Friday evening that to avoid having "this omnibus situation from ever happening again," he wants Congress to re-instate "a line-item veto."

Why it matters: This would allow him to veto specific parts of a bill without getting rid of the entire thing. Trump was deeply unhappy with the $1.3 trillion spending bill approved by Congress early Friday morning, but signed it anyway on Friday afternoon.