Big Talent Under the Gun as ESPN Cuts Loom

Kohjiro Kinno/ESPN Images

ESPN’s last big round of layoffs took place in 2015 and stayed, for the most part, behind the camera. Its next round won’t be so deferential to talent.

The Disney-owned cable channel is set to reduce personnel in the coming months, with the bulk of cuts coming from the on-air ranks. The move is indicative of the growing pressure ESPN feels as the cable ecosystem evolves, and of how the network plans to adapt in response.

According to Nielsen research, ESPN had 87.4 million subscribers in March, down from more than 100 million six years ago. Subscriber erosion has presented a challenge for all cable channels in the era of skinny bundles — low-cost network packages delivered via broadband, such as DirecTV Now — but ESPN, with its outsize presence in the cable landscape and the Walt Disney Co. portfolio, has been scrutinized more closely than most brands.

ESPN demands the largest affiliate fee of any cable network, averaging $7.21 per subscriber per month in 2016, according to SNL Kagan. It also boasts what may be the highest programming costs. The network spent many years aggressively pursuing — and driving up — sports rights fees. Its NFL, NBA, and MLB packages together cost the network $4 billion per year, in addition to what it pays for college football, golf, and other sports programming.

“ESPN has locked in contracts for all of its content, so it knows exactly how much its content costs are going up,” says Needham senior analyst Laura Martin. “It can’t control the amount of subscribers in the TV ecosystem. It has to figure out another way to get back to the profitability targets it sent the parent company through its budgeting.”

Sustained strong ratings for live sports have protected ESPN from the damage its cable cousins endured as delayed and digital viewing of entertainment programming became the new normal. But while other channels can manage change by loosening or tightening the programming spigot, ESPN’s options for controlling costs are limited as subscriber levels drift downward.

“One way to do that is to cut costs through people costs,” Martin says.

ESPN has shifted its talent priorities in the last two years. Gone are old, high-priced hands such as Chris Berman, Keith Olbermann, and Bill Simmons. Among the channel’s rising stars are Scott Van Pelt, who began hosting a special late-night version of “SportsCenter” in 2015; Michael Smith and Jemele Hill, who launched their own specially branded 6 p.m. “SportsCenter” last year; and “Mike and Mike” co-host Mike Greenberg, who the network is eyeing for a possible solo morning show. All four represent a type of personality that ESPN will value in the coming reorganization — they appeal to young or traditionally underserved audiences and are able to move seamlessly between television and digital.

Reprioritizing talent is part of a larger ESPN effort to pivot toward digital — and mitigate losses. In a February conference call following a fiscal first quarter that saw an 11% year-over-year decline in operating income for his company’s cable division, Disney CEO Bob Iger touted ESPN’s planned launch of a standalone streaming app.

“I can tell you our full intent is to go out there aggressively with direct-to-consumer [offerings of] ESPN and other Disney-branded properties,” Iger said. He also emphasized the strong presence of Disney’s channels — including ESPN — on the new skinny bundles, which Nielsen does not yet count in subscriber measurement or television ratings.

Disney, meanwhile, is at a crossroads, with reports circulating that Iger may extend his tenure as CEO beyond his planned 2018 exit, even as he fends off criticism over his participation in a business advisory council for President Trump’s White House.

Amid such distractions, the future health of ESPN looms large, threatening to overshadow success in other arenas such as feature films, consumer merchandise, and theme parks.

“Disney’s share price pivots on the health of ESPN,” Martin says. “If ESPN is not doing well, Disney’s stock price goes down.”

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  1. Helmut says:

    I agree with most of these comments as the content on espn has gone down (jemele) hill. Too many social views for a sports network
    On air personalities that need to go…
    Dan Lebatard
    Jemele Hill
    Mike Greenberg
    First take hosts

    Getting rid of Cowherd and Simmons was a mistake on the part of espn.

  2. D Williams says:

    I grew up on ESPN, even in college it was my most watched channel. Today I don’t even bother watching while on the treadmill. Why? Because everyone I glance over its a black male talking to another black make about black stuff. When or why did ESPN turn into BET? These layoffs will consist of mostly white males. There must be a pretty white girl and loud black male on the screen at all times evidently. No thanks, I stopped watching.

  3. phinsfan66 says:

    I think they will all be fine… I haven’t watched more than 30 seconds of a Sports Center for the last 5 years because they simply CAN NOT give us a highlight without trying to be a comedian with every sentence. I am sure they can all find work on the Comedy Channel… At least they got rid of Bayless, but kept Stephen A. Hahahahahahaha…

  4. steve johnson says:

    it wold be a shame to break up mike and mike probally one of the greatest sport talk shows ever!! good move to get rid of bayless now get rid of stephen a. we all know what the a stands for!!!

  5. Bill Blaski says:

    Leave Golic and partner him with his son. People do not want their cable bills rising for espn

  6. sergeant2 says:

    ESPN seems to want to compete with the likes of Good Morning America, Live with Kelly and the View. Big mistake on ESPN’s part in my opinion. Mike & Mike has become unwatchable thanks to the constant interruptions every 15 minutes for some eye candy to join the desk to update us on the latest tweet about so and so growing a new beard, or some other mundane stuff nobody cares about.

  7. channer81 says:

    The anchors are boring compared to the mid ’90s when they were crazy witty and made sportscenter and ESPN the name it is today. Nowadays its more about anchors getting famous because of the name not for their work..

  8. jazmineyancey says:

    dump little Dan LeBatard

  9. Victor Zapata says:

    They Need new and more talented Blood, the guys on there now are old and are getting super boring!!!!!!

  10. John Lucas says:

    If either of the Mikes from “MIke and Mike” leaves I hope it’s Greenie. I enjoy the show greatly when Greenie isn’t there and someone like Trey Wingo or Adnan Virk is with Golic. It’s a far more enjoyable show,

  11. Kate says:

    I’d hate to see most of these folks go. I love Mike and Jemele, SVP, Golic, and Reali.

  12. Joel Newman says:

    Chris Berman has not been missed. Anyone with that large an ego should not be in front of the camera

  13. Dan says:

    Get rid of Stephen A. Also Tony Reali is the most underutilized man on TV….give him an interview show.

  14. Mike says:

    Jemelle Hill a rising star?????????? She is one of the worst ESPN has. Stephen A Smith, Dan LeBatard need to go as well!!!!!

  15. Quad says:

    This dismantling couldn’t of happened to a douchier bunch of agenda-pushing entitles, starting with Disney.

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