Last week, ESPN announced the layoffs of some 100 staffers, most of them on-air talent. This comes after layoffs of ~300 other personnel in 2015, but since those were behind-the-scenes employees, the news didn’t seem as momentous.
There are several factors coming together that make life particularly difficult for the sports network. One big problem is the commitment ESPN has made to pay top-dollar for the right to air professional sports events, particularly NFL and NBA games.
These financial commitments are set in stone and are made well into the future, which means that ESPN is committed to high long-term fixed costs (broadcast rights) in exchange for what’s turning out to be declining variable revenues (viewer subscription fees and advertising).
This isn’t a very good financial model at all.
Which brings us to the second big factor: declining subscribers.
Since 2011, the network has lost ~15 million subscribers. So far in 2017, the network has experienced an average loss of ~10,000 people per day.
The financial impact of these losses is significant. All of those lost subscribers amounts to more than $1.3 billion per year in money that’s no longer going on ESPN’s books.
Sports journalist Clay Travis predicts that if the current trajectory of subscriber losses continues, ESPN will begin losing money in 2021. (And that’s assuming the subscriber base losses don’t accelerate, an assumption that might be a little too rosy.)
The fundamental question is why so many people are no longer subscribing to ESPN. The predictable answer is because services like Hulu, Netflix and Amazon, with their on-demand services, are squeezing cable/satellite TV and its subscription business model.
One way Disney (ESPN’s parent company) has attempted to maximize viewer subscription revenues over the years has been by bundling the network with other, less lucrative Disney media properties like the History Channel, Vice, Disney Junior and the Lifetime Movie Network. In the Disney constellation of channels, ESPN has been the acknowledged “driver” of subscription revenues all along, with die-hard sports fans being willing to subsidize the other Disney channels – often never watched by these subscribers – as the price of access.
But something else is happening now: ESPN itself has begun to lose viewers as well.
According to television industry publication Broadcasting & Cable, ESPN’s viewership rating has declined ~7% so far this year. ESPN2’s rating is down even further – an eye-popping ~34%.
Percentages like those aren’t driven by “sidebar” incidental factors. Instead, they cut to the core of the programming and the content that’s being offered.
If there’s one programming factor that’s tracked nearly on point with ESPN’s viewership declines, it’s been the explosion in “sports-talk” programming versus actual “sports game” programming at the network. As Townhall opinion journalist Sean Davis has written:
“If you talk to sports fans and to people who have watched ESPN religiously for most of their lives, they’ll tell you that the problem is the lack of sports and a surplus of shows featuring people screaming at each other. The near-universal sentiment … is that the content provider sidelined actual sports in favor of carnival barkers.”
Davis points out the flaw in ESPN’s shift in colorful terms:
“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 of people yelling about sports stuff for several hours a day – sports talk radio – is free.”
There’s an additional factor in the mix that’s a likely culprit in ESPN’s tribulations – the mixing of sports and politics. That programming decision has turned out to be a great big lightning rod for the network – with more downside than upside consequences.
The question is, why did ESPN even go in that direction?
Most likely, ESPN execs saw the tough numbers on higher costs, subscriber losses and lower ratings, and decided that it needed a larger content pie to attract more consumers.
The reasoning goes, if some people like sports and others like politics, why not combine the two to attract a larger audience, thereby changing the trajectory of the figures?
But that reasoning flies in the face of how people consume political news. In the era of Obama and now Trump, political diehards gravitate to outlets that reinforce their own worldviews: conservatives want news from conservatives; liberals want news from liberals.
MSNBC and the Fox News Channel have figured this out big-time.
But if you’re starting with a cross-partisan mass media audience for sports, as the original ESPN audience most certainly was, trying to combine that with politics means running the risk of losing one-half of your audience.
That’s what’s been happening with ESPN. Intertwining sports with coverage about bathrooms in North Carolina, transgender sports stars, gun control laws and proper national anthem etiquette only gets your numbers going in one direction (down).
The question for ESPN is how it plans to recalibrate and refocus its programming to truly defend its position as the worldwide leader in sports broadcasting. However it decides to position itself in terms of the delivery of its content – television, online, subscription, pay-per-view or other methods – it should refocus on covering live sports events.
Not sports talk … not debate … not politics or sociology, but the sports themselves.
At one time, not so long ago, sports were a safe refuge from politics and the news. ESPN would do itself – and its viewers – a favor if it sought to recapture that spirit.