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ESPN Layoffs: How Social Media Impacting The Sports World

May 10, 2017 by Christian Zilles

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Photo Credit: Shutterstock

Even before sports fans realized how extensive the layoffs at ESPN were going to be, analysts were calling it the “Bloodbath in Bristol.” All told, more than 100 anchors, reporters, analysts and staffers lost their jobs in a massive talent purge at ESPN. The size of the cuts may have been surprising, but the fact that ESPN is being forced to “right-size” their operation is really just a sign of the times.

Digital media and the ESPN restructuring

In short, digital media and social media competitors have been continually eroding the sports audience of ESPN. And that meant ESPN no longer had a monopoly on sports analysis and sports commentary, especially when these digital media properties had a much better grasp of what young millennials wanted in their sports coverage – much better, in fact, than what the suits in Bristol, CT (the headquarters of ESPN) could deliver.

The numbers bear this out – ESPN has been hemorrhaging money for years. Over the past five years, the company has lost 12 million subscribers. During “peak ESPN,” the sports network was in the homes of 100 million Americans. At that time, ESPN was synonymous with sports, so the network was busy lining up expensive on-air talent (with contracts approaching close to $3 million a year), and paying heavily for the rights to televise NFL and MLB games.

Now, the company is only in the homes of 88 million Americans. That’s because ESPN has become the victim of the whole “cord-cutting generation” that is rejecting cable TV. And when these young viewers cut the cord with cable, they are also cutting the cord with ESPN. That difference between 88 million and 100 million subscribers may seem like a rounding error to some, but it carries huge dollar implications. ESPN receives a “carriage fee” of $7 per month per subscriber. So you do the math – that’s close to $1 billion in lost revenue.

How will ESPN survive?

The path going forward at ESPN is going to be a more financially prudent one. The company is getting rid of expensive talent, and getting more work out of its existing talent (for example, one popular morning show, the “Mike & Mike show” will become just the “Mike Greenberg Show” – one Mike is cheaper than two Mikes!)

And, the company will also be doubling down on Building digital media and social media. That means creation of more content for the ESPN.com website, more streaming video content and more content for ESPN apps. Presumably, the network will continue to pony up big to carry Monday Night Football and NBA action, so there won’t be a lot of savings there. But there may be a lot of synergies that ESPN could explore with sister companies. Remember – ESPN is a subsidiary of Disney, which also owns a lot of other media properties, like ABC. That might be one way that ESPN can hold on to its existing talent.

What happens to the ESPN talent that was let go?

For most of the announcers and on-air personalities that were part of the talent purge, there may not be any real alternatives. ESPN is the “worldwide leader in sports,” and there’s simply no good second choice of where to land. Sure, some may land with competitors like Fox Sports 1, or some may pick up some extra work with the NFL Network, but it looks like the golden heyday of cable sports TV is over.

With people getting so much of their sports fix online or via apps, the cost of paying so heavily for a 24/7 TV network just became sustainable. It wasn’t that ESPN did anything wrong, it just caught up at a time of enormous change in the cable TV industry. All media today is now digital media, for better or worse.

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Tags: digital media, Marketing, social media

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Christian Zilles

Founder and CEO of Social Media HQ.

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