ESPN Axes Long-Standing Reporters, But Not The Execs That Failed To See Cord Cutting Coming

from the forest-for-the-trees dept

For years ESPN has been the perfect personification of the cable and broadcast industry’s almost-comic denial regarding cord cutting and market evolution. Long propped up by a system that forces consumers to buy massive bundles of largely-unwatched channels, ESPN has struggled with the rise of streaming alternatives and sleeker, “skinny” channel bundles. The sports network, which has lost 10 million viewers in just the last few years, has been trying to argue that these losses (which caused Disney stock to lose $22 billion in value in just two days at one point) are simply part of some kind of overblown, mass hallucination.

Surveys have shown that 56% of consumers would drop ESPN in a heartbeat if it meant a reduction in the $8 per subscriber the channel is believed to cost. But last year, ESPN exec John Skipper suggested that these departing customers weren’t worth keeping anyway:

“People trading down to lighter cable packages. That impact hasn’t leaked into ad revenue, nor has it leaked into ratings. The people who?ve traded down have tended to not be sports fans, and have tended to be older and less affluent. We still see people coming into pay TV. It remains the widest spread household service in the country after heat and electricity.”

All is well! Nothing to see here! This narrative that cord cutters are somehow uneducated, too old, or otherwise not worth keeping (which isn’t true) sits at the heart of cable and broadcast executive denial. And while execs like Skipper consistently insisted that everything was under control, former ESPN talent like Bill Simmons have noted that the cord cutting revolution came out of left field and surprised the hell out of the self-proclaimed worldwide leader in sports, which had spent years spending millions on SportsCenter set updates and licensing deals with nary a care in the world.

Instead of identifying market evolution and quickly adapting, ESPN did, instead, what any other legacy company would do. One, it began suing companies that tried to offer more innovative, disruptive cable TV packages that didn’t include ESPN by default. Two, it began yelling at companies like Nielsen simply for showing company executives the truth: ESPN was losing subscribers at an alarming rate. In short, executives doubled down on bad behavior and denial, something fans had noticed for several years:

This week, some ESPN employees began paying the price. Including long-standing workhorse beat reporters like Ed Werder, who was among 100 on-air personalities and writers given pink slips this week.

In a memo posted to the ESPN website, Skipper proclaimed the staff reductions were necessary to “manage change” (something Skipper has shown himself incapable of doing while somehow remaining employed):

“A necessary component of managing change involves constantly evaluating how we best utilize all of our resources, and that sometimes involves difficult decisions…Dynamic change demands an increased focus on versatility and value, and as a result, we have been engaged in the challenging process of determining the talent?anchors, analysts, reporters, writers and those who handle play-by-play?necessary to meet those demands. We will implement changes in our talent lineup this week. A limited number of other positions will also be affected and a handful of new jobs will be posted to fill various needs.”

That’s great and all, but purging your on-air talent won’t magically make executives like Skipper less myopic and more flexible. After losing an estimated 10,000 viewers per day, ESPN recently stated it will finally offer a standalone streaming service. But that won’t solve ESPN’s woes either. I’m told many of Disney/ESPN’s contracts with cable providers contain provisions that prohibit cable providers from offering channel bundles without ESPN — unless ESPN offers a standalone streaming service. In other words, even if ESPN adapts, it opens the door to new skinny, sport-free bundles without ESPN — accelerating subscriber declines.

None of this is pretty, and were I a betting man I’d wonder if Disney/ESPN doesn’t get swallowed up completely by a company like Verizon sometime in the next year. At that point you’d have to wonder if ESPN execs, like John Skipper (you know, the ones actually responsible for the channel’s monumental implosion) might actually face something vaguely-resembling accountability.

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Comments on “ESPN Axes Long-Standing Reporters, But Not The Execs That Failed To See Cord Cutting Coming”

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32 Comments
Anonymous Coward says:

The one thing I hate the most about TV sports shows is having to listen to idiotic, obnoxious sportscasters talking shit to each other nonstop. Adding insult to injury, these bozos make huge salaries for doing absolutely nothing useful.

Firing all these overpaid sportscasters would be a relief to both ESPN’s budget as well as sports fans.

kallethen says:

ESPN’s situation kind of parallels what happened to the music recording industry during the shift from CDs to MP3/music downloads.

  • Recording industry only allowed full CD albums, no singles, for max profits. <–PARALLEL–> ESPN forces their channels into all cable packages for max profits.
  • iTunes/Amazon/et al allow people to purchase singles again ($1 for that single instead of ~$17 for a full CD for the one song you want). <–PARALLEL–> Online services allow people to pay for only what they are watching instead of huge packages ($ for shows instead of $$$ for unwatched channels).
  • Recording companies freak out at low profits. <–PARALLEL–> ESPN freaks out at low profits.

I just wish the execs would get punished for the lack of foresight and adaption, not the little guys.

Anonymous Coward says:

since when has any company, particularly when run by those who either are or act as if they are 100 years old, so full of themselves and so out of touch with reality, removed the top boys rather than the lower classes? it’s cheaper to work this way because, i assume, of the law suit that would ensue and/or the golden handshake deal that would have to be given to get the contract terminated. no, much easier and cheaper to get rid of those who know what they’re talking about, especially when the boss of the country is one of those people who doesn’t give a toss about anyone except the top boys!!

Anonymous Coward says:

Not a word about content....

Not a word about content. I recently had the misfortune to see some ESPN content while visiting family over the xmass holidays. The camera work was horrible, political blather by the commentators was out of place, fuzzy imagery; backhaul is at 720 and upconverted to 1090 for broadcast. Too much concern about off the play-field antics (personal and/or criminal lives) of the players.

tom (profile) says:

Doubt that Disney would agree to a buyout. Now spinning off ESPN while it still looks profitable to someone like Verizon seems more likely. Disney has used the massive profits from ESPN to purchase other IP. Star Wars is becoming a cash cow and looks to continue for many years to come. Managing IP is something Disney has excelled at for decades.

My_Name_Here says:

Great Story

Good story, but you are a little too dismissive of the ESPN opinion of those who choose to drop it.

If someone is willing to drop the channel, they likely were not active viewers. If you are a sports fan and like the sports ESPN has, you are unlikely to want to drop them just like that. There are no real online services at this point to replace them. Of course, some might drop in favor of ESPN streaming, but you wouldn’t call those cord cutters, just phase shifters.

So what the exec is saying is basically true. If non-viewers are “cutting” the cord, then yes, ESPN loses some subscription revenue (but not the full $8, as the cable company got a big chunk of it), but they are not losing on the ratings and the ad revenue as the same viewers remain.

There is no claim that people leaving are less intelligent – but he does clearly state that it leans towards older and less affluent. That doesn’t mean unintelligent.

Now, for ESPN, their drop rate is lower than the overall cable drop rate, and with something like 88 million subscribers, they still are a powerhouse in what is a more and more diluted marketplace:

http://www.businessinsider.com/espn-subscribers-2017-3

ESPN is by far the most expensive channel per subscriber. That is certainly a negative. But their subscriber losses are in line and less severe than what cable is losing overall. The question is more to do with an overall shift away from cable towards streaming services.

ESPN seems to be facing up to that reality pretty well. Belt tightening seems to be a reasonable way to address a loss of income. Since on air talent is quite expensive, it seems a good place to go. Were there any other layoffs or unfilled posts cancelled this time around?

ECA (profile) says:

tHIS IS THE BIGGEST...

This is one of the biggest SPORTS problems around..
as I only see 2-3 of them..

1. Pay for Sports..(I only want $1million per year)
2. Price per seat..(and scalpers)
3. Signing YOUR RIGHTS AWAY for any production or Broadcast of your image WORLD WIDE..shirts to dolls to golf CLUBS..

OTHERS make more money on your image then EVEN you get for Wages.
And once you add all this up, SOMEONE has to pay…
And ESPN and the cable/sat business plan to CHARGE EVERYONE, even if you DONT watch ESPN channels..

The estimate that 30-40% want to watch sports..I think is high..but if you charge all the cable/sat Users Along with that 30%..THATS allot of ill gained goods. As ESPN is getting paid for the 60% that DONT WATCH SPORTS..

So how do you make more money AFTER you ROB everyone else..START CUTTING CORNERS..

Adrian (profile) says:

ESPN in Oz

I’ve been watching a bit of the NBA playoffs on ESPN in Australia. It’s a channel on our sole cable provider, Foxtel (yes it’s owned by Muroch). During the half time analysis, Australian ESPN viewers just get extra ads! You can get rid of journos and replace them with ads, the executive behind that descision deserves something…

Anonymous Coward says:

Re: ESPN in Oz

Foxtel is going so well in Australia that the other partner with News Corpse is Telstra (Australia’s ex-gov, legacy monopoly Telco, now with competition) deciding to sell up their share of the company before Murdoch sells up first leaving them with a non performing asset. They have seen what Murdoch does when better internet based platforms competes with cable TV/internet & sells his share to the other local partner who are then left with a big loan (to buy the shares) & fewer customers.

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