Disney vs. Financial Conflict

How Disney deals with the shrinking cable industry

Emily Powell

ConflictWhat 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)

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 cream flavors to win over the people.

Between organizations and customers

This could be like a company wanting to move locations because it’s cheaper but their clientele wanting them to stay in their current location for convenience.

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.

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.

Disney’s Money ProblemIn 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.

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 quicklySubscribers 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)

ESPN subscribers are the lowest that they’ve been in the last decade.

Disney’s Internal ConflictDue 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 business

Could pose as problematic considering their most successful blockbuster couldn’t even keep their stock up.

Some think they should look at other possible compromises

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.

Disney’s Conflict with Other CompaniesSince 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.

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 companies and the fluctuations the companies have dealt with concerning those numbers since, for example.

Disney’s Conflict with their CustomersWhile 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 alone

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.

How Disney is Dealing with the ConflictWhile 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 companiesEach 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 customersThis is a little harder to pinpoint, but I would argue that Disney is using the

“compromise” technique

Mid concern for self and for others

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.

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.

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?

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?

Questions for Further ResearchWith 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?

Works CitedHarwell, 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.