Failures

by Karl Bode


Filed Under:
business, cord cutting, predictions, sports

Companies:
espn



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.


Reader Comments

Subscribe: RSS

View by: Time | Thread


  • icon
    That Anonymous Coward (profile), 28 Apr 2017 @ 6:22am

    I await seeing the new hires who have a wikipedia level of understanding the sports they are covering.

    I'm sure that all of the staff they cut were the real problem in the company, not the fact they had to be let go to make sure the Exec's got their bonuses.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 28 Apr 2017 @ 6:36am

    Down With ESPN

    The Downfall of ESPN means cheaper cable prices until the cable companies jack the price up again to protect their legacy business.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 28 Apr 2017 @ 9:29am

      Re: Down With ESPN

      Cheaper? Man I want whatever you are smoking. They are going to keep rates where they are while delivering less to you, or more likely charge you more for their "NEW, Restructured packages more tailored to your personal tastes!"

      reply to this | link to this | view in chronology ]

  • icon
    D.C. Pathogen (profile), 28 Apr 2017 @ 6:51am

    Disney owns ESPN

    So Don't Worry, The Laid off reporters and writers will get a nice severance package if they agree to train their foreign replacements and not talk about it.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 28 Apr 2017 @ 7:07am

    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.

    reply to this | link to this | view in chronology ]

  • identicon
    kallethen, 28 Apr 2017 @ 7:11am

    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.

    reply to this | link to this | view in chronology ]

    • icon
      DannyB (profile), 28 Apr 2017 @ 10:42am

      Re:

      It may depend on your POV, but some of us little people may be consider this to be a reward rather than punishment.

      Oh, if only ESPN and all other forms of sports coverage could disappear from the face of the earth.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 28 Apr 2017 @ 3:24pm

        Re: Re:

        pretty sure by little guys, kallethen is referring to key grip #4 and the various other back line workers who no longer have employment.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 28 Apr 2017 @ 7:55am

    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!!

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 28 Apr 2017 @ 9:02am

    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.

    reply to this | link to this | view in chronology ]

  • icon
    tom (profile), 28 Apr 2017 @ 9:14am

    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.

    reply to this | link to this | view in chronology ]

    • icon
      DannyB (profile), 28 Apr 2017 @ 10:46am

      Re:

      Disney could create: The ESPN Strikes Back!

      While the rebels regroup in their hidden base, emperor trumpitine signs an executive order that all internet packages must now devote 50% bandwidth to ESPN effective throughout the galaxy.

      reply to this | link to this | view in chronology ]

  • identicon
    My_Name_Here, 28 Apr 2017 @ 9:29am

    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?

    reply to this | link to this | view in chronology ]

  • icon
    JohnnyRotten (profile), 28 Apr 2017 @ 9:30am

    Verizon has a market cap of 190B, Disney 185B. Not seeing Verizon buying them ever.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 28 Apr 2017 @ 10:07am

    swallowed up completely by a company like Verizon

    i haven't paid attn to espn for a good many years, so maybe i'm way behind the times. is espn completely passé these days? else why would verizon have an interest?

    reply to this | link to this | view in chronology ]

  • identicon
    Bruce, 28 Apr 2017 @ 10:50am

    Not only cord-cutting....

    Cord-cutting may be part of their decline but not the only reason. Read Linda Cohn's piece...

    http://nypost.com/2017/04/27/sportscenter-anchor-agrees-politics-are-hurting-espn/

    reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 28 Apr 2017 @ 12:18pm

    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..

    reply to this | link to this | view in chronology ]

  • identicon
    Adrian, 28 Apr 2017 @ 4:41pm

    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...

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 28 Apr 2017 @ 7:06pm

      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.

      reply to this | link to this | view in chronology ]

  • identicon
    Professor Ronny, 29 Apr 2017 @ 7:21am

    If ESPN execs might actually face something vaguely-resembling accountability

    With golden parachutes, even if they kill ESPN, the executives will come out just fine.

    reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Use markdown for basic formatting. HTML is no longer supported.
  Save me a cookie
Follow Techdirt
Special Affiliate Offer

Advertisement
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Advertisement
Report this ad  |  Hide Techdirt ads
Recent Stories
Advertisement
Report this ad  |  Hide Techdirt ads

Close

Email This

This feature is only available to registered users. Register or sign in to use it.