More Layoffs at Disney Interactive Ahead of November's Epic Mickey 2

Restructuring efforts at The Walt Disney Company's DIS Disney Interactive online unit has resulted in 50 employees losing their jobs after the plan was completed Wednesday. The layoffs are exclusive to the online unit of Disney Interactive and did not include the company's video game group. The company has struggled for years to earn a profit with this group and has reported operating losses of more than $40 million, despite having narrowed the losses from $86 million during its second quarter, hence the continued effort to reconstruct its business. The media networks division conversely has shown strong growth driven primarily by cable-television channels and the company's ESPN division earns the highest subscription fees of any cable channel available, and the May release of The Avengers far exceeded revenue expectations. The movie has gained more press as of late since the announcement that Amazon AMZN would be offering the film, among others, to subscribers in an effort to gain more share from Netflix NFLX users. This report is the second round of layoffs in less than two years, as the company announced 200 layoffs in January 2011 in "reorganization" efforts. Employees will hope to return based on the anticipated success of the company's November 18 release of " Disney Epic Mickey 2: The Power of Two", which will hopefully help the Interactive section regain some traction in the revenue marketplace. It appears the success of Disney's Interactive division depends on its upcoming releases and partnerships with sites like YouTube and Activision Blizzard ATVI to provide relevant online experiences and new video games, respectively. Disney's other divisions appear healthy as ESPN has extended the Major League Baseball contract through 2021 (an additional eight years) and the company reported positive earnings in early August for its second quarter, showing an 18 percent increase in operating income thanks to The Avengers, a welcome addition to an already solid balance sheet. Second quarter EPS reports of $1.01 beat consensus estimates of $0.93 and total revenues came in slightly lower than expected ($11.088 billion versus $11.305 billion estimate) but overall, Disney is a strong company that can only stand to gain from continued positive releases. Success from the November releases in the company's Interactive division and established partnerships can only prove accretive for shares.