Sports news channel ESPN, a division of Walt Disney Co., is reeling after laying off 100 staffers, including some of its well-known reporters and anchors.
Nathan McAlone of Business Insider wrote that the concerns are overblown:
But while these layoffs do show that ESPN is dealing with the sting of digital disruption, they don’t mean the business is doomed, according to a recent report by analysts at Morgan Stanley, led by Benjamin Swinburne.
To understand how the layoffs fit into ESPN’s broader strategy, it’s helpful to delve into the two main issues that provoked them. The first is that ESPN has lost millions of subscribers in the last few years, which is putting pressure on the bottom line. The second is that SportsCenter needs to continue to modernize, quickly.
Let’s look at SportsCenter first.
“Driving force behind today’s [layoffs] decision is different approach to @SportsCenter with increased emphasis on digital presence,” journalist James Miller tweeted Wednesday.
ESPN President John Skipper backed that up view in a memo Wednesday. “Our content strategy — primarily illustrated in recent months by melding distinct, personality-driven SportsCenter TV editions and digital-only efforts with our biggest sub-brand — still needs to go further, faster … and as always, must be efficient and nimble,” Skipper wrote.
Before the rise of the internet, SportsCenter was the undisputed king of sports programming. It set the narratives, and was a must-watch for all the highlight clips you didn’t want to miss.
Cindy Boren of The Washington Post reported that anchor Linda Cohn blames ESPN’s problems on politics:
Linda Cohn, who has anchored more of the network’s “SportsCenter” editions over nearly 25 years than anyone else, has heard that, too, and she spoke about it Friday, just days after massive layoffs roiled the company that proclaims itself “the worldwide leader.” The network is losing viewers at an alarming clip and, coupled with big rights fees, something had to give as the company structures itself for the future. “Something” was as many as 100 people, many of whom were familiar faces to viewers.
“They definitely overpaid for many of these products, whether it’s the NBA or starting up networks like the Pac-12 Network and SEC Network,” she said on WABC’s “Bernie and Sid Show.” “It’s well documented … They [also] did not see that they would lose all these subscribers [to competitors like Netflix.]”
But it was more than just that. Politics played a part, as did the network’s move away from strictly covering sports.
Which brings us to politics. Whether ESPN got there first or was merely led by athletes, who are increasingly becoming vocal about politics and social justice, doesn’t really matter in the face of criticism that has become a nearly constant presence. ESPN was ripped almost two years ago for giving Caitlyn Jenner its Arthur Ashe Courage Award over Lauren Hill, the Mount St. Joseph basketball player who had brain cancer. The criticism continued over its coverage of Colin Kaepernick last year and his protest of the national anthem. The network roamed farther and farther away from coverage, running near-constant debates with “hot takes” that can alienate viewers. Fandom can be polarizing enough without politics creeping into things.
Eric Chiu of the International Business Times looked at how cord cutting is affecting ESPN:
With the increased popularity of alternative cable package options and streaming, cable subscribers who don’t want channels like ESPN no longer have to subsidize them via their bill. In a poll from research firm MoffettNathanson, more than 56 percent of respondents said they’d be willing to drop ESPN or ESPN2 from their channel package if they could save $8 from their monthly bill.
The number of cable subscribers who’d want to do so isn’t going down anytime soon, either. According to analyst firm Convergence Research Group, an estimated 30.3 million households will become cord cutters in 2017, continuing a steady increase in cord cutters that’s emerged since 2010.
This trend hasn’t gone unnoticed by tech companies: Amazon will pay $50 million to stream a handful of NFL games this season, beating out prior online rightsholder Twitter. For providers like Amazon and PlayStation, the benefits to getting into the content provider game are appealing: they don’t have to pad out their catalog with providers they don’t want and can tailor their offerings to attract potential subscribers.
And while this week’s events has numerous implications for ESPN, they’re far more seismic for other cable networks. As more cable providers and subscribers look for alternative and cheaper packages, they’ve found a willing partner in tech companies seeking content for their own networks. Networks like ESPN aren’t in any danger of going extinct any time soon, but with cord cutting on the rise, one thing looks to be certain: in a media landscape where subscribers aren’t simply a captive audience, channels are going to look and run far differently than they did before.
