The ESPN Bloodbath

[BridgeTroll]

You do not have to watch sports or even be remotely interested in sports to have heard about the layoffs at ESPN.  Why did it happen?  There have been whispers about this for over a year with ESPNs vehement denials...

Best synopsis so far...

http://thefederalist.com/2017/04/26/the-real-story-behind-espns-wednesday-massacre/

The Real Story Behind ESPN's Wednesday Massacre

From poor financial decisions that are no longer paying off, to declining viewership, to an increased focus on left-wing politics, ESPN made its own mess.

Sean Davis By Sean Davis
APRIL 26, 2017

ESPN, the self-proclaimed worldwide leader in sports, became the worldwide leader in sports layoffs on Wednesday morning after news leaked that the cable network was in the process of laying off 100 staffers, most of whom are reported to be on-air talent.

The layoff reports came as no surprise to those who have followed ESPN and its on- and off-air struggles to profitably provide the kind of content that most sports fans want to watch. Shortly after the mass layoff reports were confirmed, the Internet hot takes began. ESPN is failing because of cord-cutting, because it has too much politics, because it has too little politics, because sports fans are racists, you name it.

So what's the real reason the network felt forced to slash its payroll overnight? There is no one reason. There are a number of factors, each of which has been multiplied by poor strategic decisions. ESPN would have you believe that the network is a victim of circumstances, caught up in an industry whirlwind over which it has no control. Maybe, but that's hardly the whole story. The real reasons aren't all that complicated, but they're not as simple as much of the social media hand-wringing would have you believe.

ESPN isn't struggling because of one thing. It's struggling because of a bunch of different things happening simultaneously. Some are outside of its control, and some are not. Here are the big reasons for these mass layoffs.

1) ESPN Overpaid for Broadcast Rights
In a nutshell, ESPN committed to paying massive long-term fixed costs for the right to air professional sports events, namely NFL and NBA games. Sports reporter Clay Travis of Outkick has been banging the drum on this score for quite some time, much to ESPN's chagrin (Just last month Travis predicted Wednesday's mass layoffs only to have ESPN sic its PR hounds on him and accuse him of making it all up).

In accounting terms, the network committed to high long-term fixed costs (broadcast rights) in exchange for declining variable revenues (cable subscription fees and advertising dollars). You don't have to be a mathematician to see the problems with this formula for success. Even if ESPN is making decent money right now, the music is eventually going to stop, people are going to stop dancing, and somebody's going to be stuck without a chair.

Here's how Travis sums up the problem:

The simple truth of the matter is this — ESPN spent way too much on sports rights just as its cable and satellite subscriptions began to collapse. On track for $8 billion in programming costs in 2017, ESPN will rack up its 15 millionth lost subscriber since 2011. Every single day so far in 2017 over 10,000 people have left ESPN. The numbers are astonishing and the collapse is rapid. All those lost subscribers add up to big money — that's over $1.3 billion a year in money that comes off ESPN's books every year. And ESPN is on the hook for billions and billions a year for all the years ahead. That's guaranteed payments to leagues that ESPN can't escape no matter how many employees it fires.  As I've written before, if the current subscriber loss trajectory keeps up ESPN will begin losing money by 2021. And if the subscriber losses accelerate it will happen even sooner than that.

Rising fixed costs and risky, declining revenues are the root of all of ESPN's problems. Overpriced broadcast rights are certainly the biggest piece in that financial puzzle, but they're not the only one. Salaries are also a pretty heavy fixed cost, and one the network decided to slash. Will that decision improve the financial picture, at least on the costs side? Maybe. But ESPN could fire every single person on staff and still not make the numbers work. When your ship is sinking, tossing a few deck chairs over the side isn't going to accomplish much.

We've identified and addressed ESPN's main cost problem. But what about its revenue problems? What is causing those?

2) Cable Cord-Cutting
ESPN is hemorrhaging subscribers. There is no debate about this fact. In just the last six years, the Connecticut-based sports network has lost 12 million subscribers. At roughly $7 paid out monthly to ESPN per subscriber, that's nearly $100 million in lost revenue each month going forward for eternity. The big question is: Why are those viewers no longer choosing to pay for cable, and by extension choosing to pay Disney for the privilege of having ESPN on their cable box? Is it because they're tired of paying for cable, or because they're tired of paying for ESPN?

ESPN and Disney executives will tell you it's obviously the former and has nothing whatsoever to do with ESPN. The Internet has changed things, they'll say, and services like Hulu, Amazon, and Netflix have made cable, and its exorbitant monthly fees, less necessary.

There's clearly some truth to this. Cord-cutting is a sweeping dynamic, and ESPN just happens to be the biggest chunk getting pushed into the dustpan. But ESPN's public rhetoric about cord-cutting having nothing to do with ESPN completely contradicts the corporation's rhetoric about negotiating fees from and services to cable providers.

That's because Disney, ESPN's parent, uses the popularity of ESPN's live sports programming to force cable companies into carrying and paying for a large swath of less popular Disney-owned networks. The message? If you want ESPN, then you're not only going to pay Disney for it, you're also going to pay for A&E and Lifetime and Lifetime Movie Network and History and Freeform and Disney Junior and Disney XD and Vice. It doesn't matter if you don't plan to watch a second of any of those networks: if you want to watch college football for three months in the fall, you're going to pay for the unrelated also-ran networks whether you like it or not.

ESPN knows people will pay for cable just to get ESPN, hence its near-extortion of cable companies into carrying myriad other Disney-owned channels. Given this fact, how can ESPN claim that cord-cutting has nothing to do with ESPN? If people are plugging the cord in just to get ESPN, then you can pretty much guarantee ESPN is very much a part of the cord-cutting conversation. ESPN can't have it both ways.

Is a ton of cord-cutting happening regardless of what ESPN's doing? Absolutely. Is the network a mere blameless bystander in the cord-cutting? Not at all. If ESPN wants to claim responsibility for bringing people into the cable fold, then it must also take responsibility when a diehard sports fan finally decides that ESPN's just not worth the cost of cable anymore. This brings us to the next cause of these revenue problems.

3) Declining ESPN Ratings
ESPN isn't just losing millions of cable subscribers, many of whom probably never even watched the network despite paying for it. It's also losing viewers. According to Broadcast & Cable, a TV industry trade publication, ESPN's ratings are down 7 percent this year, and ESPN2's ratings are down a whopping 34 percent. What gives?

If you talk to sports fans and to people who have watched ESPN religiously for most of their lives, they'll tell you the problem is the lack of sports and a surplus of shows featuring people screaming at each other. The near-universal sentiment of former ESPN addicts I've spoken to is that the content provider sidelined actual sports in favor of carnival barkers. Sure, you clicked over to ESPN to watch sports, but what you're actually going to get are "Crossfire"-esque segments of non-athletes making dumb arguments about topics you don't care about.

One industry insider told me that it's as if network executives looked at the popularity of local and regional sports talk radio and decided that ESPN needed to replicate that model on television to be successful. If that's what they actually thought, they were wrong.

Passively listening to a radio show while you're at work or in your car and unable to watch a live game is a very different thing than wanting to watch some game highlights during the whopping 30 minutes of free time you have to do nothing at home each night. The two aren't perfect substitutes for each other, yet ESPN's programming decisions suggest the network thinks talking heads are as big a draw as actual athletes competing on the field. And all this after spending $8 billion to get the rights to air those competitions?

It's madness. ESPN went from the worldwide leader in sports to yet another expensive network of dumb people yelling dumb things at other dumb people, all the while forgetting that the most popular entertainment form of people yelling about sports stuff for several hours a day — sports talk radio — is free. This brings us to the final major reason for ESPN's current predicament.

4) Politics
With all this in mind, it's not at all surprising that ESPN decided to retreat into the fever swamp of leftist politics to save itself. An obsession with politics didn't doom ESPN, but it's going to make it extremely difficult for ESPN to dig itself out.

An obsession with politics didn't doom ESPN, but it's going to make it extremely difficult for ESPN to dig itself out.
The industry insider I spoke to said the focus on politics was a symptom, rather than a root cause, of all these current issues. According to this insider, ESPN executives saw the writing on the wall — higher costs, subscriber losses, lower ratings — and decided that it needed a bigger content pie to attract more content consumers. Sports is too small, so why not try for a real mass audience by broadening the network's focus to include news and politics? If X number of people like sports, and Y number of people like politics, then surely combining sports and politics will lead to a much bigger audience, thereby solving the company's financial dilemma.

This view, of course, ignores how people consume political news. The diehards who love political news don't turn on the TV or open the laptop and navigate to sites with zero bias that just play it straight. Why? Because those kinds of political news and commentary providers don't exist. Because that's not what political junkies want. Liberals want news from liberals, and conservatives want news from conservatives. The Balkanization of political news and commentary didn't happen by accident. People in this business know you have to pick a side. That works in political news. It doesn't work if you have a bipartisan mass media audience.

Instead of expanding its pie by combining two types of mass media content, ESPN ended up communicating to half its audience that it didn't respect them. How? By committing itself entirely not to political news, but to unceasing left-wing political commentary.

Instead of expanding its pie by combining two types of mass media content, ESPN ended up communicating to half its audience that it didn't respect them.
You want to watch the Lakers game? Okay, but first you're going to hear about Caitlyn Jenner. Want some NFL highlights? We'll get to those eventually, but coming up next will be a discussion about how North Carolina is run by racist, homophobic bigots. You want to see the box scores of today's baseball games? You can watch those at the bottom of the hour, but right now some D-list network talent would like to lecture you about gun control. After that we'll have a panel discussion about how much courage it takes to turn your back on the American flag.

The most interesting aspect of the mass layoffs on Wednesday isn't that they happened, it's who the network targeted. Not the high-priced carnival barkers and the know-nothing loudmouths doing their best to make Rachel Maddow proud. Nope. ESPN targeted sports reporters. In an effort to cut some fat from its bottom line, ESPN exchanged a scalpel for a chainsaw, skipped the fat entirely, and went straight to cutting out muscle.

If ESPN wants to once again be the worldwide leader in sports, it should refocus on covering sports, which used to be a refuge from politics and the news. America is politicized enough already, and if its citizens want political news, several cable outlets do political news far better than ESPN ever could. Instead of doing sports and politics poorly, perhaps the network could return to the thing that it used to do better than everyone else in the world: cover live sports.

[thelakelander]

I don't know anything about politics on ESPN but I used to watch Sportscenter daily back in my college days.  I'm still just as big of a sports junkie as I was back then.  However, since I moved to Jax, I live stream games due to my South Florida teams getting no coverage this far north.  As for cable, I view it like having a landline or buying CDs/DVDs.  Nothing more than lighting good hard earned money on fire.  I stopped paying for all of them years ago.  What I can't get for free online, I supplement with an Amazon firestick.

[civil42806]

This is it in a nutshell

"If you talk to sports fans and to people who have watched ESPN religiously for most of their lives, they'll tell you the problem is the lack of sports and a surplus of shows featuring people screaming at each other. The near-universal sentiment of former ESPN addicts I've spoken to is that the content provider sidelined actual sports in favor of carnival barkers. Sure, you clicked over to ESPN to watch sports, but what you're actually going to get are "Crossfire"-esque segments of non-athletes making dumb arguments about topics you don't care about."

The food channel has better programming

[Jagsdrew]

I don't know anything about politics on ESPN but I used to watch Sportscenter daily back in my college days.  I'm still just as big of a sports junkie as I was back then.  However, since I moved to Jax, I live stream games due to my South Florida teams getting no coverage this far north.  As for cable, I view it like having a landline or buying CDs/DVDs.  Nothing more than lighting good hard earned money on fire.  I stopped paying for all of them years ago.  What I can't get for free online, I supplement with an Amazon firestick.

I think ESPN back when I was in college to now is completely different broadcasting. I used to wake up and turn on ESPN to catch highlights and top plays from all around the sports world in less than an hour.

Now, you turn it on and its debating this and debating that and less on recapping yesterday's sports and highlights. It's more talk show driven than anything else. 

I'll only watch ESPN for live sporting events and I pay for Sling TV which is $20/mo than over $100/mo thru a cable provider.

[Tacachale]

Never watched it much, and we haven't had cable for years anyway. Must say that I agree with others, though, the "Sports Shouting" shows are the worst.

[thelakelander]

Civil42806, this guy would not approve....

[Non-RedNeck Westsider]

And Clay Travis has hit the am morning drive hard on 930 and has been beating this drum for a while.

I agree wholeheartedly with the financial / cord-cutting argument, I'm kind of tepid on the political side of it, but do agree it's more a symptom than a cause.

But me personally, I used to watch ESPN for Dan Patrick, Berman & Olberman.  I never like Kornheiser.  Was never a fan of S.A. Smith.  And honestly, still true today, don't watch much TV period, it takes too much attention, but I do listen to am radio 3-7 hours a day as background noise.  And I still get Dan Patrick and used to get Rome.

They were dominant in the rise to the top.  No one could believe they were doing what they were doing and how they were doing it.  I recommend reading "Those Guys Have All the Fun".  But... the crash is going to be just as spectacular.

[Elwood]

ESPN's biggest issue is that they think ESPN, not sports, is the story. They put themselves and their overpriced "talent" ahead of what the core viewers tuned in for in the first place - sports reporting.

[Steve]

Agree with this. The politics definitely plays into it. Regardless of a person's views, people turn to sports to get away from it. I realize the Colin Kaepernick thing was hard to ignore from ESPN's aspect, but Caitlin Jenner isn't (she is no longer contributing to sports).

If they want to do an "outside the lines" style special on it, then fine. Instead, they're crowding their marquee shows with it.

Even today, Tim Tebow is one of the lead stories, which is just crazy. Tim Tebow is playing Class A baseball. What other Class A athlete is ESPN covering? I don't care that he had a short lived NFL career (or a great college career for that matter). To me it's the equivalent on ESPN giving a business update on Papa John's because Peyton Manning is an investor.

[FlaBoy]

ESPN spent way way too much on the NBA. That alone is killing them with the stagnant revenue from cable cord cutters. But $24 billion over 9 years for the NBA was insane with Turner. The problem is also that they have invested so much in the NBA, they have to cover it non-stop, which most people just don't care about until playoff time. But they have to push the product that they gave an arm and leg for. That means a decrease in MLB coverage and basically doing away with any NHL coverage. So now, other than college and NFL coverage, it is all NBA all the time. That is also how they chose their talent in many ways to prop up. I think this has also contributed to their leftward swing through the years since the NBA has the only left leaning fan base. Most NFL and college football fans are not to the left. College football is only big in states that Trump won or in areas he is strong (see the SEC, B1G, and Big 12). Probably the only good thing they have going right now is their college sports coverage but they are alienating their Joe 6 Pack sports fan who does not want to hear about politics on SC6. In the end it comes down to the cable cutters and that NBA deal that has pushed them to the brink financially since there is no way out because no other networks are going to take it. As a result, their liabilities are now outpacing their revenue.



As a result, they have been bleeding talent for a few years. This was the bloodbath though at the end.

[BridgeTroll]

Here is another take on the "political" argument... I only posted those paragraphs as it is a pretty long article...

http://deadspin.com/espns-diminished-future-has-become-its-present-1794433796?utm_campaign=socialflow_deadspin_twitter&utm_source=deadspin_twitter&utm_medium=socialflow

Look who ESPN is turning the network over to. If you take Van Pelt, Smith, Hill, Greenberg, Beadle, Dan LeBatard, and Bomani Jones and Pablo Torre (who likely have a forthcoming show) as, broadly, representing the network's new core cast, ESPN is looking less white and less male every day, a trend that will certainly continue. And, broadly speaking, these people are liberal.

This last is a point a lot of the network's dumbest critics have pointed to as a reason for ESPN's decline, and even levied as a charge of sorts. It's true, of course, if not necessarily for the reasons those that are making it think it is. Former New York Times public editor Daniel Okrent once titled a column "Is The New York Times a Liberal Newspaper?," and answered the question in the first line: "Of course it is." He would later regret his flippancy, but the basic argument was sound: The Times' viewpoint was (and is) urban, northeast, and educated, and members of those groups generally skew liberal.

The same is broadly true of the most prominent and talented ESPNers, and if the network is going to build shows around their personalities, that has to be at least acknowledged, if not embraced. If ESPN wants Bomani Jones, a genuine superstar talent, to be Bomani Jones, they have to be comfortable with him unleashing his takes on TV and on Twitter. Disney isn't ordering up lefty takes—they'd be delighted if Jones could connect to audiences the same way while offering up conservative ones—but he wouldn't be Bomani Jones if he did that. Allowing their best talents to be themselves is a strategy that makes sense for ESPN. It's also tempered by the conservatism inherent in being, still, not just the most powerful media operation in its sphere (if not outright) on the planet, but part of a still vaster corporation that works according to the dictates of a capitalist industry.

[FlaBoy]

Here is another take on the "political" argument... I only posted those paragraphs as it is a pretty long article...

http://deadspin.com/espns-diminished-future-has-become-its-present-1794433796?utm_campaign=socialflow_deadspin_twitter&utm_source=deadspin_twitter&utm_medium=socialflow

Look who ESPN is turning the network over to. If you take Van Pelt, Smith, Hill, Greenberg, Beadle, Dan LeBatard, and Bomani Jones and Pablo Torre (who likely have a forthcoming show) as, broadly, representing the network's new core cast, ESPN is looking less white and less male every day, a trend that will certainly continue. And, broadly speaking, these people are liberal.

This last is a point a lot of the network's dumbest critics have pointed to as a reason for ESPN's decline, and even levied as a charge of sorts. It's true, of course, if not necessarily for the reasons those that are making it think it is. Former New York Times public editor Daniel Okrent once titled a column "Is The New York Times a Liberal Newspaper?," and answered the question in the first line: "Of course it is." He would later regret his flippancy, but the basic argument was sound: The Times' viewpoint was (and is) urban, northeast, and educated, and members of those groups generally skew liberal.

The same is broadly true of the most prominent and talented ESPNers, and if the network is going to build shows around their personalities, that has to be at least acknowledged, if not embraced. If ESPN wants Bomani Jones, a genuine superstar talent, to be Bomani Jones, they have to be comfortable with him unleashing his takes on TV and on Twitter. Disney isn't ordering up lefty takes—they'd be delighted if Jones could connect to audiences the same way while offering up conservative ones—but he wouldn't be Bomani Jones if he did that. Allowing their best talents to be themselves is a strategy that makes sense for ESPN. It's also tempered by the conservatism inherent in being, still, not just the most powerful media operation in its sphere (if not outright) on the planet, but part of a still vaster corporation that works according to the dictates of a capitalist industry.

Deadspin might be the trashiest thing in sports. If you ever want to be sad about humanity, just read their comments section. Bomani Jones being a "a genuine superstar talent" makes them lose even more credibility.

[FlaBoy]

People trying to shoe horn politics into this are dipshits who got butthurt because somebody said it was ok for Kaep to kneel or because they (rightfully) fired Curt Schilling for being a disgusting piece of trash.  To say ESPN, a corporate behemoth, is "liberal" or engages in liberal politicking is willfully stupid.  Every single moron on their NFL team has lambasted Kaep, as just one example, and their other talents consistently take a center-right perspective.  I mean, they funded the damn Undefeated, run by MF'ing Jason Whitlock, who is many things, none of them liberal or leftist.

Jason Whitlock does not work at ESPN and hasn't for a couple years now. The Undefeated is very very different than when he started it and has taken a leftward turn. Politics is not the reason for ESPN's problems, but with their other problems, it certainly has not helped in recent years.

[BridgeTroll]

Another article with some interesting angles...

http://theweek.com/articles/694772/how-espn-went-from-powerhouse-bloodbath

How ESPN went from powerhouse to bloodbath
Jeff Spross

There was a bloodbath at ESPN on Wednesday.

A dramatic round of layoffs had long been expected at the Worldwide Leader in Sports, but the numbers turned out much bigger than predicted: Roughly 100 on-air reporters and personalities were let go, plus some additional behind-the-camera crew members. By Wednesday afternoon, people like Ed Werder and Scott Burnside — who'd worked at ESPN for 17 and 13 years, respectively — had announced on Twitter that they were toast.

The network, which employs about 8,000 people around the world, actually let a whopping 300 go in October 2015. But this week was unusual for the deep cuts to on-air talent.

The bloodbath was the result of several colliding forces.

First off, ESPN's personnel costs are unusually expensive. Shows like SportsCenter, for instance, feature a raft of well-paid anchors. Stars at the network often earn anywhere from $1.5 million to $3 million. Hundreds of reporters and analysts get paid handsomely to gab on ESPN. All that hot air costs a lot of dough.

The next problem was falling revenue, thanks to a collapse in subscribers.

After peaking around 100 million in 2011, ESPN subscribers fell to 88 million in the most recent quarter, largely because of cord-cutting, or when customers abandon paid cable and TV packages for viewing options on the internet. Each subscriber pays as much as $7.21 per month — it's a basically invisible charge baked into your cable TV bill — which means the overall decline adds up to something like a $900 million drop in annual revenue for Disney, ESPN's parent company.

"ESPN seems to be bleeding money because of cord-cutting, so my salary was unattractive to them," Adam Rubin, who used to cover the New York Mets for ESPN, explained to The 30. "And the new MLB editor at ESPN wants to get away from 'thorough' beat coverage — that's the precise word she used — and I suppose I was the sacrificial lamb to hammer home that point."

And then there's the third force driving ESPN's troubles: the rising costs of broadcasting sporting events.

Any company that broadcasts a game for the NFL, NBA, MLB, or any other league has to pay a massive fee to do so. And those fees are ballooning: Collectively, television, radio, and internet companies paid $10.8 billion for broadcasting rights in 2011 and over $15 billion in 2015. Those costs are projected to top $21 billion in 2020.

The NFL takes in about $7.5 billion each year from charging fees to media companies. Recently, ESPN paid $2.66 billion to secure an NBA broadcasting package through the 2024-25 season.

To get a sense of scale, the very first national TV sports contract, inked between ABC and the American Football League in 1960, was a piddly $8.5 million over five years.

Companies like ESPN have to pass some portion of those costs onto their customers to stay financially viable. Since 2007, the monthly fee ESPN subscribers pay has jumped 120 percent. Needless to say, as that price tag rises, the constantly improving (and often free!) options for viewing sports on the internet become more and more attractive to people.

As for why the leagues are hiking their fees, the simplest answer might be because they can. While the individual teams ostensibly "compete" with one another, the leagues operate as something akin to a trust or monopoly, controlling the number of teams and the supply of sports entertainment. And while different teams used to do their own individual deals, the leagues long ago figured out the advantages of offering broadcast rights as a unit.

There's obviously some upper limit to how much the leagues can score before they drive away too many customers. But we don't seem to have hit it yet. People love sports. And there's only so many businesses that can offer pro sports to consumers. The NFL doesn't exactly have a lot of competition.

There's one other possible factor in ESPN's troubles worth mentioning: the general turn in sports reporting to a far more outspoken social liberalism. Setting aside the moral merits, it's certainly true that plenty of sports viewers don't share those liberal politics. That may have produced an extra shove for some customers: "When people begin realizing they can live without your business model, you can't give them more reasons to object to paying for it," as conservative columnist Steve Deace put it.

At the same time, parsing the degree of ESPN's liberalism, or how much it irked some portion of its viewership, is an impossibly subjective question to answer.

So in the end, like so many media companies, ESPN is trying to adapt to this digital age. The network is trying to increase its digital offerings, and Disney bought a $1 billion stake last year in a new streaming service launched by Major League Baseball.

"Dynamic change demands an increased focus on versatility and value," ESPN's president, John Skipper, told employees Wednesday. "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."

That's dry language, but in practice it amounts to nudging out a lot of people with contracts about to expire, by telling them they could only stay on with a big pay cut. In some cases, ESPN offered people with years left to go just 50 percent of the money remaining to them — or they could finish out their contracts while effectively being benched.

For the moment, ESPN's costs will be slimmer and its books will be easier to balance. But neither the internet nor the heavy hand of the sports leagues are going anywhere. So the squeeze will continue.

In the end, all ESPN may buy with this bloodletting is time.

[Steve]

People trying to shoe horn politics into this are dipshits who got butthurt because somebody said it was ok for Kaep to kneel or because they (rightfully) fired Curt Schilling for being a disgusting piece of trash.  To say ESPN, a corporate behemoth, is "liberal" or engages in liberal politicking is willfully stupid.  Every single moron on their NFL team has lambasted Kaep, as just one example, and their other talents consistently take a center-right perspective.  I mean, they funded the damn Undefeated, run by MF'ing Jason Whitlock, who is many things, none of them liberal or leftist. 

I don't think it matters which way at all. Sports is one of those outlets that can bring people of all types together. Politics should have no place in sports in my opinion, Right or Left.