Disney to Lay Off Hundreds at ABC, Cut Costs by 10 Percent

Disney-ABC Television Group will be reducing annual costs at the unit by 10 percent by the close of its parent company's fiscal year with a restructuring and reduction of staff levels, Variety has learned.

Plans for the cost-cutting measures at the group, which includes the ABC television network, ABC News, ABC Studios, and entertainment cable channels including Freeform and Disney Channel, are still being developed.

Disney-ABC sources tell Variety that no headcount for staff reductions has been determined and that details of the cost-cutting effort are fluid, but expectations are that the layoffs will number in the hundreds.

The restructuring may be a means of cutting overhead in outmoded areas such as distribution and marketing to redirect those resources to content development. But it will inevitably revive rumors that Disney no longer views ABC as one of it long-term core brands.

Disney has consistently denied rumors that it is looking to sell ABC, but the cost cuts come at a time when competitors are plowing money into TV content. Netflix earlier this month poached ABC's highest-profile producer, Shonda Rhimes, signing her to a multi-year deal and ending her 15-year relationship with ABC Studios that yielded hits such as "Grey's Anatomy" to "Scandal."

But ABC has boasted recent investments in talent and content -- signing mega-producer Carlton Cuse to a four-year deal valued in its entirety in the low eight-figures, and recruiting singer Katy Perry to serve as a judge on "American Idol" for a fee of $25 million for one season.

A representative for Disney-ABC Television Group declined to comment.

The cost-cutting would not affect ESPN, which has suffered its own recent troubles but falls outside of the Disney-ABC group.

While all the major U.S. broadcast networks have struggled with ratings declines in recent years as competition for viewers within and outside the traditional TV ecosystem increases, ABC has lagged behind competitors CBS and NBC. It is also the only one of the Big Four broadcasters unbuoyed by a television contract with the National Football League in an era where live pro football is the biggest driver of same-day ratings.

On the cable front, Disney-ABC's group is comprised primarily of youth-skewing channels such as Freeform, Disney Channel, and DisneyXD, making it vulnerable to changing viewership patterns in younger demos.

The Wall Street Journal first reported news of the cost-cutting effort and staff reductions.