This powerpoint discusses ESPN's recent decrease in subscription numbers and how Disney has responded to the decline.

1. Disney vs. Financial Conflict
How Disney deals with the
shrinking cable industry
Emily Powell

2. Conflict
What is conflict?
Conflict is defined using “the three I’s of conflict”
Incompatible goals
Interdependence
Interaction
Can also be defined as “the interaction of interdependent people who
perceive opposition of goals, aims, and values, and who see the other
party as potentially interfering with the realization of these goals.” (Miller
159)

3. Conflict (cont.)
Incompatible goals
“The notion of incompatible goals is central to most definitions of conflict and can involve a
plethora of issues in the organizational setting.” (Miller 159)
Incompatible goals can occur in the organizational world in a few ways:
Within the organization
This could be like two co-workers arguing over how to best complete a task given
to them by their employer. Both want to have the best method while both
needing each other to complete the task.
Between organizations
This could be like two rival ice cream companies trying to come up with new ice

4. Conflict (cont.)
Interdependence
Incompatibility is not enough to create conflict, however.
Interdependence is needed because it invests the two parties in the situation and to each
other. It isn’t possible for them to settle their incompatibility by separating-they need
each other, which creates the conflict.
Take the co-worker example already provided for example. They are required to work
together to accomplish the task given to them by their employer, and therefore, they are
interdependent while they complete that task.

5. Conflict (cont.)
Interaction
If incompatible goals and interdependence are like the logs and the tinder, interaction is like
the spark that sets the whole mess ablaze.
Conflict requires expression of discontentment and for the incompatibility and
interdependence to be made clear.
With the co-workers example, this could be like one of them pitching an idea of how to
complete the task and the other refuting it, followed by the first employee getting angry
and so on.

6. Disney’s Money Problem
In the article “Disney have a money problem that even ‘Star Wars’ can’t fix”
from The Washington Post, Disney’s latest film success, Star Wars VII The
Force Awakens is discussed.
It was one of the most successful movie premiers in movie history.
It made its first billion dollars faster than any other movie in history.
Broke several film industry records.
And yet, the article also discusses how Disney’s stock dropped after the
release and how, if something doesn’t change, Disney may be facing a
decline, despite their film industry’s successes.

7. Disney’s Money Problems (cont.)
Of Disney’s assets, its most expensive investments are by far its cable TV
channels. The Disney Channel, Disney Junior, ABC, Lifetime, and its
largest, ESPN.
According to fool.com, Disney spends $7.3 billion on the content aired on ESPN alone per
year.
This is more than any other company spends on any other content aired, including media
monsters like Netflix.
The problem is that cable TV subscribers are dropping quickly
Subscribers pay about $7 a month included in their cable package for ESPN alone
“7 million U.S. households have dropped ESPN in the last two years.” (The Washington Post)

8. Disney’s Internal Conflict
Due to these financial struggles, Disney is facing a choice.
Keep ESPN and all of its cable costs
Cut down on ESPN
Change to internet platforms for ESPN
Some Disney representatives have stated that Disney and ESPN will make it out of this
temporary lapse in no time.
Iger, Disney’s ESPN chief, stated: “We have lost some subscribers, but we believe
we will continue to derive growth from ESPN. It will just not be at the rate it
was before.” (Harwell 1)
Some think Disney should cut back on ESPN costs and focus on other areas of their

9. Disney’s Internal Conflict (cont.)
This is a perfect example of how conflict can occur within an industry
There are incompatible goals because some Disney employees believe that the financial
issue should be resolved in one way while others believe it should be resolved entirely
differently.
They are interdependent because they are all a part of one company that has to make one
choice for the betterment of them all, despite their differing opinions.
There has been interaction because this is something that Disney is dealing with right now.
They have spoken about it to reporters, there is discussion within the organization, and it
was sparked by the numbers showing the drop in subscribers.

10. Disney’s Conflict with Other Companies
Since Disney’s biggest problem with ESPN’s drop in subscribers is that many
aren’t just switching to a more basic cable plan, which would still include
other channels like ABC and Disney, but are dropping cable all together.
This is increasing competition and conflict between Disney and other
companies like Netflix and Hulu that offer cheaper alternatives that gain
in popularity every day.

11. Disney’s Conflict with Other Companies (cont.)
Incompatible goals is pretty clear. All of the companies want to win over
more customers and make more money.
The companies are interdependent for a few, less obvious ways.
Competition is good for business. It makes a company stronger and challenges them to
always improve, whereas they would likely remain stagnant without a competitor.
They expand each other in a sense.
Disney creates movies that Netflix and Hulu can show
Netflix and Hulu buy the rights to those movies from Disney
The interaction could be customers beginning to switch to the streaming

12. Disney’s Conflict with their Customers
While less common, I see the relationship between a company and its
customers as conflictual as well, even if it isn’t acted upon in the ways that
other organizational conflicts would.
Disney is wanting to keep their customers and keep their cable networks,
thus maintaining their largest source of revenue. They also want to drive
out competing companies like Netflix and Hulu already mentioned so they
can keep these customers.
In today’s difficult financial times, many people are just looking for a
cheaper option, which is often companies like Netflix and Hulu.
A subscription to Netflix costs just over how much a cable subscriber would pay for ESPN

13. Disney’s Conflict with their Customers (cont.)
There are incompatible goals because, as already mentioned, Disney wants
to keep its customers and keep making more money while the people just
want the best option for them, which may not be cable.
They are interdependent because Disney needs the customer’s
subscriptions to pay off their investments while the customers need the
product that they’re paying for.
They interact through the subscriptions. If a customer drops a subscription,
it would cause this conflict.
All of this to say that conflict exists on a variety of levels, even in ways that
you wouldn’t expect.

14. How Disney is Dealing with the Conflict
While it is difficult to determine what method of conflict management was
used for internal conflict without actually being on the inside, the conflict
management style can be determined for the other two.
Conflict between companies
Each company has its own best interest in mind and doesn’t give much mind to the other
company’s well being. Therefore, this style of conflict management is “competition”
Low concern for others, high concern for self
Conflict between company and customers
This is a little harder to pinpoint, but I would argue that Disney is using the “compromise”
technique

15. How Disney is Dealing with the Conflict (cont.)
According to Fortune.com, Disney’s revenue has been rising once again, but
through some different methods.
Increase in advertisements
Increase in program costs
More focus on film portion of the company
More focus on alternative media usage.

16. How Disney is Dealing with this Conflict (cont.)
I see this as compromising because they are in a sense giving some leeway
on the ESPN cable front by focusing on other ways to increase the
revenue without having to get rid of ESPN entirely.
For example, Disney has begun investing in a company called BAM-tech, which streams
baseball footage.
This way, the people get the sports that they would on ESPN without having to pay for
cable and Disney still makes money off of the streaming.

17. Questions
I would be interested to know what Disney was like on the inside when their
stock was dropping.
What was their conflict resolution between employees?
To what extent were they willing to potentially sacrifice ESPN and other costly investments
for the sake of the company’s overall growth?
To what extent were they willing to sacrifice the content provided to their current
subscribers?

18. Questions (cont.)
Additionally, I would love to know how Disney’s culture played into this
decision, if at all.
Disney is known for catering to its customers and providing a one-of-a-kind experience.
They’re dedicated to creating the “happiest place on earth”
But if revenue had continued to drop, would that have been sacrificed? I think personally
that another company would likely have just cut ties with some expendable additions to
the more expensive investments like ESPN or just raised prices further for their current
customers and left it at that, but Disney was willing to accommodate the needs of the
customers as well and pursued other areas of increasing their income.
Was this merely a conflict resolution strategy or were they keeping their reputation
and culture in mind?

19. Questions for Further Research
With what change did Disney’s stock begin rising again?
With the new films?
With BAM-tech?
With increased content prices?
Who specifically came up with these ideas and what was their though
process behind them?
What other suggestions were there for making more money and why were
they rejected?

20. Works Cited
Harwell, Drew. "Disney Has a Money Problem That Even 'Star Wars' Can't Fix." Washington Post. The
Washington Post, 28 Dec. 2015. Web. 31 Oct. 2016.
Miller, Katherine. Organizational Communication: Approaches and Processes. Vol. 7th. Belmont, CA:
Wadsworth Pub., 1999. Print.
Reuters. "Disney’s Earnings Pop As ESPN Subscribers Drop." Fortune Disneys Earnings Pop As ESPN
Subscribers Drop Comments. N.p., 08 Aug. 2016. Web. 31 Oct. 2016.