ESPN announced its latest round of layoffs on Wednesday in the latest sign of trouble for the Walt Disney-owned and self-described “worldwide leader in sports.”
The cable sports network’s president, John Skipper, told his staff in a memo that ESPN would lay off roughly 150 employees this time around, with most of those cuts affecting behind-the-scenes staffers, including producers along with digital and technology staff. The move follows ESPN’s more high-profile decision to cut another 100 employees earlier this year, with most of those layoffs affecting on-air personalities and writers from across the ESPN network of TV and digital properties. ESPN also laid off about 300 employees in 2015.
The latest staff trimming represents a cut of about 2% of ESPN’s 8,000 employees, and it comes as the sports giant continues to struggle with shifting trends in how people follow sports, specifically, and get their news and entertainment in general. The cord-cutting trend has hit ESPN hard, with the network’s subscriber base shrinking by more than 12 million in recent years (a trend that is likely to continue as more and more viewers move away from traditional cable and satellite subscriptions).
That troubling decline has weighed on ESPN’s ad revenue in recent quarters, which in turn hurts parent Disney’s share price. As a result of that decline in ad revenue (along with the fact that ESPN is stuck in various long-term sports TV rights contracts that cost the network billions of dollars), ESPN was reportedly tasked with cutting as much as $250 million from its budget this year.
ESPN’s layoffs clearly show the network trying to cut back on spending, but how will the reduced staff affect the massive network and its strategy going forward?
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Doing “less” with less
In his memo on Wednesday, Skipper (who recently had his own contract extended through 2021) promised that ESPN “will continue to invest in ways which will best position us to serve the modern sports fan and support the success of our business,” which seems to indicate that the network isn’t necessarily implementing a hiring freeze, even as multiple rounds of layoffs have reduced the unit’s workforce. However, perhaps the more telling line from Skipper’s memo is where he noted that the latest layoffs “reflect decisions to do less in certain instances and re-direct resources.” Loosely translated, this means that ESPN will likely scale back the scope of its TV and digital coverage in certain areas.
Bryan Curtis, a former staffer at ESPN-run Grantland, wrote on news site The Ringer that ESPN’s scaling back can take the form of the network assigning fewer reporters to specific beats, or having a smaller roster of anchors for its flagship SportsCenter program. (The network already announced this week that it is canceling evening editions of SportsCenter on its ESPNews channel.) About the changes in scope at ESPN, Curtis wrote that it is “weird to think about an ESPN that couldn’t find room for Ed Werder or Jayson Stark or Jane McManus,” referencing some of the bigger on-air names included in the previous round of ESPN layoffs. “It’s almost weirder to think about one whose ambitions are held in check—about an ESPN that can’t churn out any form of content it wants to.”
ESPN’s digital video push
One way that ESPN is trying to reach younger viewers who are less likely to tune in on a traditional TV set is with increased investment in digital video. In addition to pumping the network’s ESPN mobile app full of short digital video clips, ESPN has expanded its partnership with social media platforms like Snapchat. After previously creating temporary video “Stories” for Snapchat’s Discover feature in recent years, ESPN said earlier this month that it would bring SportsCenter to the popular social media service. ESPN has a handful of digitally savvy young anchors (former Fox Sports host Katie Nolan, comedian Cy Amundson, and SportsCenter TV anchors Elle Duncan and Cassidy Hubbarth, among others) that are hosting three-to-five-minute Snapchat videos every day with sports news updates along with game highlights and analysis. (Though, even that venture already got off to a rough start when it was revealed that ESPN doesn’t have the rights to stream NFL game highlights on Snapchat.)
ESPN streaming service launching in 2018
But, ESPN’s biggest digital bet still looks to be the still somewhat mysterious standalone sports streaming service the network plans to launch in the spring of 2018. Called “ESPN Plus,” the new subscription-based service will stream more than 10,000 live sporting events annually, including Major League Baseball, hockey, soccer, tennis, and college sports, Disney said in August. The service will offer cord-cutters the ability to stream some of ESPN’s biggest sporting events without signing up for a cable subscription, while giving ESPN a new avenue to sell advertising while also collecting money from subscription fees. The move is part of a bigger push into streaming from Disney, which is paying $1.58 billion to take control of the MLB’s successful BamTech streaming arm. For Disney, the ESPN streaming service will precede an even bigger test in the form of a subscription streaming platform for TV and movies, aimed at competing with Netflix, planned for 2019.
