Walt Disney Co. DIS +1.54% ’s ESPN is reducing its workforce by about 10% through a combination of layoffs and attrition of employees, including remote workers, according to a person familiar with the matter.
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The cuts come as ESPN and Disney deal with challenges posed by the coronavirus pandemic, which has resulted in lost ad revenue from canceled or delayed sporting events. Disney’s theme parks, filmed entertainment and cruise divisions have all suffered this year as the pandemic stymied travel and moviegoing across the world.
ESPN is eliminating about 500 jobs by laying off 300 employees and closing 200 open positions, according to a memo sent to staffers from ESPN President Jimmy Pitaro. Mr. Pitaro said in his memo that the cuts were the result of a reorganization plan focused on digital streaming that predated the pandemic but was accelerated in recent months.
“The speed at which change is occurring requires great urgency, and we must now deliver on serving sports fans in a myriad of new ways,” Mr. Pitaro wrote in the memo, a copy of which was seen by The Wall Street Journal.
The reorganization will affect people who produce games for ESPN on the road, the person said, in addition to some on-camera talent whose contracts won’t be renewed. ESPN paid less for production costs during the pandemic, in part because it produced more games from network headquarters in Bristol, Conn.
Disney said that ESPN increased its profitability in the most recent quarter from a year earlier because the network didn’t pay as much for sports-rights fees and received more affiliate revenue—fees paid by cable and satellite companies to show ESPN programming.
Disney, one of the biggest names in theatrical entertainment, is retooling its entire business to focus on digital streaming. In October, the company announced a reorganization to support its major streaming services, including Disney+, Hulu and ESPN+. The new plan increasingly makes Disney’s traditional film and television arms feeder divisions for the company’s major streaming services, keeping them full of new movies and TV shows to lure subscribers.
Disney’s digital-streaming business has grown quickly during the pandemic. The company said in August that its streaming services have exceeded 100 million subscribers. ESPN+ had 8.5 million paid subscribers as of June 27, more than tripling its paid subscriber count from a year earlier.