Disney to Trim Half of Staff at ABC Family

Walt Disney Co. plans to cut about half the staff at its recently acquired ABC Family channel, according to sources at the company.

About 300 employees at the cable channel’s headquarters in Westwood will be laid off in the next several weeks, said an executive at ABC Family who asked not to be identified.

The layoffs will cut across all divisions, but will fall more heavily on administrative and support staff than creative personnel, the source said. Employees will be summoned to meetings early next week at which they will be notified of their status. Some will be transferred to other jobs at Disney.

The action, which was expected, comes nearly three months after Disney acquired the channel, formerly Fox Family, in a $5.2-billion deal with News Corp. and Saban Entertainment. To expand the audience for its shows and generate new advertising revenue for its struggling ABC television network, Disney is reshaping ABC Family as a secondary outlet for a range of programs.

And with much of the programming at ABC Family now handled out of the broadcast television network, Disney doesn’t need as many people to run and market the cable channel. Disney, which operates several cable channels, including the Disney Channel, SoapNet and ESPN, already has experienced cable personnel, the executive said.

ABC is not alone in cutting back. Other broadcasters and cable companies have been retrenching. NBC, AOL Time Warner Inc. and MTV all have laid off hundreds of workers in the last year, owing mainly to the weak advertising market that has deteriorated further since the events of Sept. 11.

The ABC executive said the soft ad market was not the reason for the Family Channel cuts.

Still, the job reductions are just the latest at Disney, which cut 4,000 jobs last year amid a weakening economy and aggressive efforts to shore up its bottom line. Disney posted a net loss of $158 million for fiscal 2001, reflecting a drop in attendance at the company’s theme parks, charges related to the closure of the Go.com Internet portal and a slowdown in advertising at the ABC network.

Analysts weren’t surprised by the scale of the cutback at ABC Family.

“I don’t think there’s anybody who’s not had some sort of staff reduction,” said Katherine Styponias, with Prudential Securities in New York.

ABC has been hit especially hard by the falloff in advertising revenue because its ratings already were in decline. In the last two years, ABC has fallen from No. 1 to No. 4 in the key 18-to-49 demographic sought by advertisers.

Acknowledging the need to recharge programming, Disney on Monday named a new president of entertainment for ABC and announced the resignation of veteran executive Stu Bloomberg.

Disney said ABC Family will be an important testing ground for new programs that could find their way onto the sister broadcast network and give it a platform to cross-promote movies, such as “Harry Potter and the Sorcerer’s Stone,” for which Disney recently acquired the broadcast rights in a record deal with Warner Bros.

The channel, which gives Disney an additional 81 million subscribers in the U.S., features a mix of kids and family programs, including ABC comedies from the 1990s. ABC Family also continues to broadcast televangelist Pat Robertson’s talk show, “The 700 Club.”

But Disney’s efforts to revamp ABC Family have been complicated by a nasty contract dispute with EchoStar Communications Corp., the nation’s second-largest satellite provider.

Disney is suing EchoStar to keep the satellite provider from dropping ABC Family.

EchoStar has argued that under an agreement it signed in 1995, it has the right to drop ABC Family if there is a change in its control. The company says it needs to make room for additional channels it’s required to carry under federal regulations. EchoStar also has complained about what it says are fee hikes Disney has levied for its channels and weak ratings for ABC Family. Though it remains a low-ranked channel, ABC Family saw an 18% jump in household viewers in January, Disney said.

On Wednesday, a Disney executive accused EchoStar of making false statements and denied that the company has sought any rate increases for ABC Family beyond those agreed to by EchoStar in 1995. An EchoStar spokeswoman declined to comment.

A federal judge will review Disney’s request for an injunction Sept. 17.