ESPN is Disney's black sheep - Axios
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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 trade adviser circulated docs linking manufacturing declines to abortion, spousal abuse

Peter Navarro. Photo: Andrew Harnik / AP

Peter Navarro, President Trump's top adviser on trade policy, circulated two diagrams internally claiming without evidence that decreased manufacturing is causing divorce, spousal abuse, increased abortion rates, increased drug use and more, according to the Washington Post, which obtained the documents.

Why it matters: President Trump and Navarro are aligned on trade, both contending that broad agreements like NAFTA are killing U.S. manufacturing. Two White House officials told the Post of concerns that "such unverified information could end up steering White House policy."

Go deeper: The art of the deal-breaker.

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White House weighs in on Niger deaths, travel ban ruling

Trump at a Rose Garden press conference Tuesday afternoon. Photo: Carolyn Kaster / AP

President Trump called the families of the four U.S. service members killed in action in Niger to offer condolences, Press Secretary Sanders said Tuesday evening. Trump was questioned about his public silence on the deaths yesterday, and falsely claimed his predecessors had declined to call families of those killed.

The White House also released a statement calling a Hawaii federal judge's block on Trump's revised travel ban a "dangerously flawed" decision. The Justice Department will "vigorously defend" the ban, the White House said.

Meanwhile, Trump sent out two afternoon Twitter attacks — one aimed at the media and the other aimed at Democrats in Congress.

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McCain says he'll support bipartisan health care plan

McCain speaks after he received the Liberty Medal from the National Constitution Center in Philadelphia. Photo: Matt Rourke / AP

Sen. John McCain, whose opposition sunk an earlier Republican health care proposal, said Tuesday night that he looks "forward to supporting" the bipartisan plan put forward by Republican Sen. Lamar Alexander and Democratic Sen. Patty Murray. McCain added that he hopes the plan is "a sign of increased bipartisanship moving forward."

President Trump has called it a "good short term solution" and Chuck Schumer has said most Democrats are supportive. House conservatives, meanwhile, are more skeptical.

Go deeper: The details of the plan.

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Mueller's team interviewed Sean Spicer Monday

Spicer resigned as Press Secretary over the summer. Photo: Alex Brandon / AP

Former White House Press Secretary Sean Spicer was interviewed Monday by Special Counsel Robert Mueller's team, Politico reports. Spicer fielded questions on the firing of James Comey and Trump's meetings with Russians, including his Oval Office meeting with Russian Foreign Minister Sergei Lavrov, per Politico, in a meeting that lasted "much of the day."

The big picture: Mueller's investigation has reached people who were in the room when Trump made key decisions and statements that are now under scrutiny.

Go deeper: Spicer kept notebooks detailing goings-on at the White House; Mueller wants to speak with six Trump aides

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Close Putin ally linked to Russia's fake news factory

Photo: Mikhail Klimentyev / AP

The Russian "troll factory" that spread misinformation during the 2016 U.S. election, the Internet Research Agency (IRA), was funded by a close ally of Vladimir Putin's, according to a CNN report. The oligarch, Yevgeny Prigozhin, is nicknamed "Putin's Chef." His business, Concord Management and Consulting, had a contact drawn up with IRA in 2013 for 20 million rubles ($650,000).

Why it matters: This is further evidence that election meddling efforts reached into Putin's inner circle.

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EPA loosens radiation safety standards

Photo: Pablo Martinez Monsivais / AP

The Environmental Protection Agency has labeled levels of radiation 10x greater than those considered acceptable under the Obama administration as not harmful to people's health, according to a Bloomberg report. The EPA sets such regulations in case of nuclear meltdowns or other events that expose the public to radiation.

  • EPA spokesman Michael Abboud said: "EPA has not changed its standards regarding radiation exposure, and no protective guidelines were changed during this administration...The guidance was released on January 11, 2017 -- before the President was inaugurated." Bloomberg said an FAQ on the decision was released last month.
  • Jeff Ruch, executive director of the Public Employees for Environmental Responsibility, told Bloomberg: "This appears to be another case of the Pruitt EPA proclaiming conclusions exactly opposite...of scientific research."
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Facebook's head of experimental hardware is leaving

Regina Dugan is leaving Facebook. Photo: Photo by Brad Barket/Getty Images

The head of Facebook's skunkworks division Building 8 will leave the company. Regina Dugan said in a statement given to Recode that there's "is a tidal shift going on in Silicon Valley, and those of us in this industry have greater responsibilities than ever before" and that the "time feels right" to be "thoughtful about new ways to contribute in times of disruption." She said in a different post that she will be in charge of a "new endeavour."

Why it matters: Dugan arrived at Facebook last year to lead a division tasked with projects like building a way to type with your mind. Her departure comes as the company faces enormous pressure over its role in an increasingly unequal and divided society.

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Magic Leap confirms $502 million fundraise

Magic Leap CEO Rony Abovitz
Photo by Brian Ach/Getty Images for Wired

Magic Leap, the secretive "mixed reality" startup, announced on Tuesday that it has raised $502 million in new venture capital funding led by Singapore sovereign wealth fund Temasek. This is the same round that Axios discussed last week, based on a Delaware regulatory filing (which authorized up to $1 billion in new shares at an increased valuation). The post-money valuation appears to be around $5 billion.

Bottom line: Investors clearly keep seeing something they like in Magic Leap, but consumers are still waiting for the Florida-based company's first product to debut.

Cap table: In addition to Temasek, other new Magic Leap investors include EDBI (Singapore), Grupo Globo (Brazil) and Janus Henderson Investors. Return backers include Alibaba Group, Fidelity Management and Research Company, Google, J.P. Morgan Investment Management, and T. Rowe Price.

Related: A pair of former Magic Leap engineers today announced that their new startup, which helps streamline the design process of 3D concepts for VR/AR apps, has raised $3.5 million in seed funding.

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Federal judge blocks Trump's latest travel ban

An Iraqi family landed in the United States as a federal court blocked a travel ban in March. Photo: Felipe Dana / AP

A federal judge in Hawaii has blocked President Trump's third attempt at implementing a travel ban, which was set to go into effect Wednesday.

What's next: The administration is almost certain to appeal, meaning the revised ban could again reach the U.S. Supreme Court. But for now, the block means the administration cannot deny travelers from six of the eight countries officials said were either unable or unwilling to provide the information the U.S. requested for entry.

  • His quote: Judge Derrick K. Watson in Hawaii, who issued a temporary restraining order against the administration, said the latest version of the ban, "suffers from precisely the same maladies as its predecessor."
  • What's in question: As with the previous versions, the underlying decision relies on whether the ban is based on animosity toward Muslims.
  • What makes this ban different from the previous versions: The latest order was only passed after the U.S. underwent extensive negotiations with other countries for more information that would vet their citizens. The list of countries affected by the ban also now includes North Korea and Venezuela, two countries that are not Muslim-majority. The other countries include Syria, Libya, Iran, Yemen, Chad, and Somalia.
  • What critics are saying: Challengers argue the additions are largely "symbolic," per the Washington Post's Matt Zapotosky, who writes that the new order would only impact" certain government officials from Venezuela, and very few people actually travel to the U.S. from North Korea each year."
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Trump's short list for Fed chair

Yellen at a hearing in Washington. Photo: Andrew Harnik / AP

President Trump is expected to name his pick to be chairman of the Federal Reserve before leaving on an Asia trip Nov. 3, Bloomberg reports. Here are the candidates:

  1. Current chair Janet Yellen
  2. Fed board member Jerome Powell
  3. National Economic Council Director Gary Cohn
  4. Former Fed member Kevin Warsh
  5. Stanford University economist John Taylor
Why it matters: "At issue for the next Fed chair, if Yellen isn't renominated, is ensuring the long expansion doesn't give way to a recession," Bloomberg writes.