ESPN Analysts Routinely Told Execs Not To Worry About Cord Cutting
from the nothing-to-see-here dept
ESPN has long personified the cable and broadcast industry’s tone deafness to cord cutting and TV market evolution. The company not only spent years downplaying the trend as something only poor people do, it sued companies that attempted to offer consumers greater flexibility in how video content was consumed. ESPN execs clearly believed cord cutting was little more than a fad that would simply stop once Millennials started procreating, and ignored surveys showing how 56% of consumers would ditch ESPN in a heartbeat if it meant saving the $8 per month subscribers pay for the channel.
As the data began to indicate the cord cutting trend was very real, insiders say ESPN was caught flat footed by the trend. Instead of adapting for the streaming era, the company spent years doubling down on bloated sports licensing deals and SportsCenter set redesigns.
These decisions ultimately came back to haunt the “worldwide leader in sports,” resulting in ESPN losing 16 million subscribers over seven years (and an estimated 17,000 defecting viewers per day). As the accountability hammer began to fall, ESPN execs tried to pretend they saw this coming all along. ESPN subsequently decided the only solution was to fire hundreds of longstanding sports journalists and support personnel, but not the executives like John Skipper (since resigned) whose myopia made ESPN’s problems that much worse.
This week, the Wall Street Journal offered up a report on the arguably stupid debate over whether ESPN’s programming is partisan. In it was buried this little nugget indicating that the analysts ESPN paid to help prepare it for the future routinely told company leadership that cord cutting was a nothingburger that would never become a widespread issue. Even as late as 2014, when the stats were becoming very clear, analysts were telling execs they had nothing to worry about
“ESPN?s research department presented data arguing cord-cutting was unlikely to become widespread, according to attendees.
“They were flat-earthers,” said one former ESPN executive.
At the same time, ESPN was spending aggressively. The company agreed to triple the fees it would pay the NBA, which it believes is growing in popularity. On the talent side, Mr. Skipper closely managed negotiations, desiring to beat back rivals like Fox Sports 1 and NBC Sports. Agents, former ESPN executives and hosts said that led him to overpay for several on-air personalities.
You’d hope that ESPN kept its receipts. Amusingly, executives could have simply read Techdirt for free and been better informed.
The irony is that ESPN hasn’t fully gotten the message the cord cutting revolution is sending: give your customers what they want. While many don’t watch sports at all, those that do and cut the cord simply want a standalone version of ESPN streamed for a monthly fee. And while ESPN recently unveiled a new streaming service it claims finally delivers this, we’ve noted how that’s not actually true. ESPN’s still so worried about cannibalizing the traditional cozy cable TV cash cow you still can’t get a standalone ESPN streaming service without subscribing to traditional cable.
The thing many cable execs don’t want to admit is this: rising programming costs and surging competition and choice means TV isn’t going to be as profitable as it used to be. Companies can either cling tightly to outdated models in a misguided attempt to prevent inevitable evolution until it’s too late, or they can get out ahead of the phenomenon now. There’s still a large number of cable and broadcast executives under the false impression that there’s a choice in the matter.