Rough times are ahead for ESPN talent.
ESPN is planning “significant” talent layoffs that would eliminate “tens of millions of staff salary from its payroll” by this summer, Sports Illustrated reported Sunday. According to the report, the round of cuts and buyouts would affect some well-known personalities, though there is “no set list of names yet.”
ESPN last laid off employees 17 months ago, cutting numerous behind-the-scenes players who had been with the company for years, even some who had been there since the beginning. The company also laid off hundreds in 2013.
The job cuts are the latest indication of ESPN’s recent struggles. The network has lost more than ten million subscribers in the past six years thanks to the cord-cutting trends that have affected the entire cable industry. For years observers wondered how much longer viewers would pay hefty cable bills for channels they largely did not watch, particularly ESPN, the network with the highest subscriber fee. With the advent of popular streaming services such as Netflix and Hulu, and “skinny bundles” without expensive sports channels, the the non-sports viewer is now able to cut ESPN without losing popular entertainment fare in the process.*
The subscriber loss has come at a particularly inconvenient time for ESPN, which is shelling out $1.9 billion per year for the NFL and $1.4 billion for the NBA. Those exorbitant rights fees, especially when paired with the substantial subscriber loss, have taken their toll. Parent company Disney has posted lower-than-expected revenue in several recent quarters.
Now more ESPN employees will pay for developments out of their control — spiraling rights fees and a cable business model that largely depended on people paying for channels they did not want.
* Of note: It seems less likely that regular ESPN viewers are dropping the network, even though there is a fairly popular suggestion that ESPN is losing subscribers because of dissatisfaction with its content. That only makes sense if one presumes that the kind of viewer who regularly watches ESPN (i.e. a not-so-casual sports fan) would cut not only the ESPN networks, but the other cable sports outlets with which they are usually bundled. It is doable, particularly if one can get a skinny bundle with major sports broadcasters TBS or TNT, but a drastic step in an era when many major sporting events air exclusively on cable.
(Sun. news from SI.com 3.5)
