ESPN: The Worldwide Leader in Layoffs

ESPN: The Worldwide Leader in Layoffs

For over thirty years the television giant ESPN has been broadcasting sports into living rooms across America and all over the world. The Disney-owned and Connecticut-based network boasts itself as “The Worldwide Leader in Sports,” a statement that is hard to refute when they cover such a large array of contests. In addition to covering the major American sports, they feature track and field, softball, lacrosse, tennis, horse racing, poker, little league baseball, and boxing, amongst others.

What made ESPN so great for so many was the familiarity of its anchors, many of whom became pseudo-family members for those who tuned in daily. Their casual but informative delivery gave an entertaining alternative to the often dry portrayal of sports on the nightly news. ESPN’s flagship program, SportsCenter, became a staple in American culture, making its jingle da-da-da, da-da-da an iconic tune for sports fans.

Why then is the world’s largest and most successful sports broadcasting network that is backed by the world’s premier entertainment company laying off so many workers? With such a global presence, one wouldn’t expect the stock of its parent company to be faltering on its behalf.

April 26, 2017, was the order 66 of ESPN. Every hour it seemed like another familiar face from the network was tweeting the unfortunate news that they’d been laid off, which added up to about 100 on-air employees and writers. For many who didn’t follow the financials of ESPN, this came as a shock; but to some, it was the media titan flexing its muscles mercilessly.

Similarly, in 2015 ESPN laid off 300 employees, mostly off-camera producers, programmers, and editors that the average fan of the network wouldn’t know of. The former “Stump the Schwab” host Howard Schwab (who had been laid off by ESPN in 2013 after 26 years) weighed in with an almost prophetic statement that can be applied to the current layoffs: “I’m not afraid to say it. One of the biggest reason (for the layoffs) was bad decisions on rights fees. The football deal and the NBA deal. With the NBA deal, you triple what you’re paying them? Really?”

Per year ESPN pays:

$1.9 billion a year to the NFL for Monday Night Football

$1.47 billion to the NBA

$700 million to Major League Baseball

$608 million for the College Football Playoff

$225 million to the ACC

$190 million to the Big Ten

$120 million to the Big 12

$125 million to the PAC 12

$130 million to the SEC

This all adds up to roughly $5.47 billion annually. In fact, the $1.9 billion paid to the NFL for Monday Night Football is about half of what NBC pays for the higher rated Sunday Night Football. Of course, they have to spend money to become the premier sports broadcasting network, but with these annual fees, it is no surprise that they eventually needed to find a way to cut costs.

A problem many find with ESPN is the amount of money that is paid by cable subscribers to have it on their package. Networks are factored into cable bills, costing each customer a certain amount each month to have those networks that they may not even want on their package. The ESPN networks are by far the most expensive in all of television, costing $9.06 per month. That’s an astronomical mark up from their competitors; for example, Fox Sports, the NFL Network, NBC Sports, NBA TV, the MLB Network, CBS Sports, the Tennis Channel, and Univision Deportes only cost a combined $5.06 per month.

The trend of cord-cutting is how many are responding to these fees, and is also to blame for ESPN’s downsizing. Cord-cutting is when one decides to drop their broadband cable subscription and obtain their media in a different manner. In the 4th quarter of 2016, 400,000 homes cord-cut, with 2016 totaling 2 million cord-cutters in total. In dropping one’s expensive cable subscription they can now choose cheaper alternatives that are often streamlined into the channels they actually utilize. Alternatives such as Sling TV or PlayStation Vue are gaining popularity as they allow you to purchase the channels you actually watch.

This is a terrifying trend for large cable networks like ESPN, who’s main source of revenue is derived from subscription fees. In fact, from 2011-2016 ESPN lost over 11 million subscribers with about 4 million of those coming from 2015-2016 alone. That adds up to about $200 million lost each year, which is huge considering the amount of money they shell out for broadcasting rights.

To counteract the number of households that are cord-cutting, ESPN has restructured the format of SportsCenter. The methodical march through the day’s highlights is all but over, seized by a program that resembles more of a talk show than anything else. “The Six” as it is now called, seeks to showcase the intersection between sports with pop culture, pushing the traditional SportsCenter off six hours to midnight.

This seems to be their push to keep the 18-34-year-old demographic who would most likely be turning to cord-cutting methods to maintain viewership. But can reformatting their flagship program really save them from declining revenue? So far, they’ve had positive ratings, but that may be a far cry from helping the network’s financial situation.

ESPN may have to look to new methods for broadcasting. It wouldn’t surprise me if ESPN reformatted their online app, Watch ESPN, to allow those without the traditional cable subscription to purchase the host of networks for a flat monthly fee. In 1994, columnist George F. Will wrote that “if someone surreptitiously took everything but ESPN from my cable television package it might be months before I notice.” Now 23 years later, Will’s jesting comment may be ESPN’s best option.

 

Sources:

Atkinson, Claire. 2017. “Long Live Cord-Cutting: More Homes Dropping Paid TV Packages.” New York Post. March 30. http://nypost.com/2017/03/29/long-live-cord-cutting-more-homes-dropping-paid-tv-packages/.

Clay Travis-. 2016. “ESPN Loses 4 Million Subscribers In Past Year.” Outkick the Coverage. August 4. https://www.outkickthecoverage.com/espn-loses-4-million-subscribers-in-past-year-080416/.

Fagan, Kate. “Whether We Met Him Or Not, We All Mourn Stuart Scott’s Passing.” 2017. espnW. Accessed May 28. http://www.espn.com/espnw/news-commentary/article/12120744/.

Gaines, Cork. 2017. “Cable and Satellite TV Customers Pay More than $9.00 per Month for ESPN Networks Whether They Watch Them or Not.” Business Insider. Accessed May 28. http://www.businessinsider.com/cable-satellite-tv-sub-fees-espn-networks-2017-3.

“On ESPN’s (and Other Networks’) Subscriber Losses – August 2016 Edition.” 2016. Sports TV Ratings. August 4. https://sportstvratings.com/on-espns-and-other-networks-subscriber-losses-august-2016-edition/5583/.