ESPN Will Get Better, or Fail Trying

Recent lay-offs, mostly of on-air talent, are a response to increasing competitive pressures.



ESPN, which has lost millions of subscribers in recent years, announced it would be laying off 100 employees, mostly on-air talent, as The Hollywood Reporter reports—they are not the first big layoffs at the sports network, but represent ESPN's continuing efforts to respond to increased competitive pressure as fortress cable's hold on Americans' viewing habits continues to weaken.

ESPN makes the majority of its money—two thirds of its revenue in 2013—on carriage fees. If you have a cable or satellite package with ESPN on it, the network gets a cut of your monthly bill whether you watch or not. The rest comes from advertising.

In 2015, cable companies lost 1.1 million subscribers, four times the number they lost in 2014. Last year, 1.8 million people cut the cord. According to Disney, which owns ESPN, the network lost 3 million subscribers in 2015, and is down to 92 million from 99 million at the end of 2013. Competing cable networks don't always benefit—in February Fox Sports 1 lost even more subscribers than ESPN, and from a smaller base.

Nevertheless, ESPN has the kind of long-term contracts for broadcasting rights other cable sports networks aren't saddled with. It spends more on content a year, $7.3 billion, than Netflix, which spends $5 billion. It's spending $166 million a year through 2036 on the ACC alone. According to Motley Fool, ESPN last year had $33.27 billion in long-term broadcast rights contract obligations for MLB, the NBA, the NFL, and the college football playoffs.

ESPN has been successful for a long time, and according to Disney revenue and operating income for its cable networks still rose three percent in the first three quarters of 2016, as Motley Fool reported, a slowdown from previous years. ESPN enjoyed the benefits of being the first network to do what it did—dedicate its broadcasts entirely* to sports—and the benefits of the cable monopolies.

Almost since its inception, the cable industry has been regulated at the local, state, and federal level. As a 1984 Cato report explained, federal regulations brought the cable industry to a near halt between 1966 and 1975. After courts and bureaucrats started rolling back these regulations, local governments stepped in with new regulations and controls. Clint Bolick noted in the 1984 report the danger posed by local regulation and franchising prompted by the fallacious idea that cable was a natural monopoly. Such predictions of natural monopoly formation, Bolick explained, tended to be self-fulfilling prophecies because of the government intervention they yield.

By 2005, the Federal Communication Commission (FCC) was concerned in the other direction, spending several years trying to combat the rising cable prices enabled by local government franchise regulations and the expansive bundles that came with them—George W. Bush's FCC wanted to force cable companies to offer more a la carte choices, but in the end, as Peter Suderman noted in 2015, it was market forces, and the internet in particular, that yielded the "great cable unbundling."

ESPN's broadcasting rights binge may have been a response to those trends. Actual games are the currency of sports broadcasting. But ratings are down in many sports too. NFL ratings fell 9 percent last year (ESPN is paying $1.9 billion a year for the broadcasting rights to Monday Night Football through 2021). Major league has seen some ratings improvements after years of decline.

At the same time as going all-in on being the home of broadcast sports, ESPN has moved away from the idea of all-sports coverage. Its own public editor reported of regular complaints about the network's foray into politics (generally of a specific left-wing variety). "Like it or not, ESPN isn't sticking to sports," Jim Brady wrote earlier this month. He repeated his assertion that disentangling sports and politics was a "fool's errand" while acknowledging that looking back at the last 20 years of ESPN's flagship news show Sports Center it was "noticeable how little politics and culture intruded into the tsunami of highlights and witty banter that once marked that show."

Brady continued: "That was reflective of the overall newsier focus ESPN had in those days." Perhaps there's a connection between ESPN moving away from content that made it unique—high-energy sports news—in favor of political rehashed rehash available at all kinds of other outlets on the internet and other platforms and the problem of viewership loss. Nevertheless, such effects are on the margins compared to the broader structural problems.

In the end, ESPN is subject to competitive pressures, and as the internet breaks down various government-constructed barriers to entry, those pressures will increase. ESPN came on the air nearly 38 years ago. If it can continue to adapt, it can continue. If it refuses to, it won't. A little bit of creative destruction could go a long way, an exciting prospect for an arguably stale network.

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  1. It's been over a decade since I worked in the cable industry (I made really bad local TV commercials), but I remember being absolutely stunned by the carriage fees of ESPN, and how much more they negotiated for each year. Basically, at the time, about 30% of our subscribers' cable bills were due to the option of ESPN on their channel lineup. And that was BEFORE they carried MNF.

    They're subject to creative destruction, like the rest of us, and they'll either adapt, or they will become this generation's version of the newspaper.

    1. this generation's version of the newspaper.

      An ESPN Zine... Hmm, sounds vintage. Sign this millennial up!

    2. Back when I had cable, the only reason I ever put on ESPN was for college football. But really, I found that I don't miss the games since I dropped it and can just get my fix on network TV.

  2. Back in my day, ESPN's studio was future proof.

    I don't know how a Mike Greenberg morning show and more Jemele Hill are going to change anything.

  3. ever since the horrible re-design of their website a year or two ago, I no longer look to ESPN for anything other than box scores. I don't care for the leftist coverage of everything either, so their non-game coverage has really nothing I'm interested in. Really the most I watch it is when travelling for work, it's the only channel in the hotel that's good

    1. They're just trying to gin up hype for their new sport, Wokeball.

  4. NFL ratings fell 9 percent last year

    Didn't a lot of people attribute this to the election?

    1. Yes, but I think is was too many bad teams and loss of interest in fantasy football.

      1. or too much interest oin Fantasy. People may have just decided to follow their teams in realtime on the mobile apps while they hunt pokemon or play COD

  5. If they want to speed up that demise, I can't think of a better way than alienating half their viewers with forcing SJW content into sports.

    1. Look, Bryant Gumbel has been doing it for years. BTW, does anyone know what Gumbel writes on the legal pad while he sits in the host chair on Real Sports?

      I'm always like, "What the fuck are you scribbling down during the segment?"

      1. "I wish people liked me as much as Greg."

      2. Things to do this weekend:

        1) Get oil changed on Ferrari.

        2) Better yet, get new Ferrari with money made from fools watching my interviews on this network.

      3. He's drawing a cartoon of his brother Greg with big lips, curly-Q hair, and stink lines.

    2. forcing SJW content into sports

      I KNOW! They won't even let Ann Coulter speak! It's a sad day for the First Amendment.

  6. ESPN (really the "regional sports fee") was the reason I finally cut the cord. The cable bill just kept going up and I was just done with it.

    1. I cut it about the beginning of Feb this year.

      Wife watched nothing but OTA shows.
      I watch auto racing and very little else that is cable specific. I'd also just record stuff on Discovery/History sister networks, download it from the Tivo and watch it when I got time.

      Lucky for me, all the auto racing I watch ends up on youtube (legitimately) within 8 days of the event.
      And Amazon is outdoing themselves when it comes to original content.
      I'll take that $80 a month savings thank you.

  7. I predict it gets much worse. Their tendency is going to be focused on going for more clicks, so it will double down on outrageous personalities, less sports and more hyperventilating talk because clicks.

  8. People don't watch for politics, they don't (really) watch for personalities - and there are only so many people who qualify as such anyway, and they don't watch for the endless insidering. They watch games, either of their team or one near them or ones they believe will put on a good game. Seriously, when the last time anyone said "I gotta catch what Stephen A. thinks about _______"?

    1. Their politics is why I cut out their channel and wen page. I ignore them completely.

  9. Politics? Really? I fail to see how sports games/commentary goes hand and hand with shows like Maddow or Hannity.

    1. *hand in hand

  10. I remember back when video killed the radio star.

  11. I don't have a problem with ESPN delving more into culture and politics, so long as they keep it separate from the purely sports related content, which should always make up a clear majority of their programming. But I also have zero confidence they will have the discipline to do that.

  12. If I were interested in sports, I would sure as hell resent bringing politics into it. There's a local web site which is really best for local rain reports in winter and local fire news in the summer. Yet they insist on throwing in little tidbits of national politics once a week or so -- Lizzie Warren persisted, the latest Trump setback -- just a line or two, no long diatribe, but it really annoys me, and not just from their nannyism and left wing slant. I go there for local news -- I get politics everywhere else, they are a local web site, they report horses on the loose, trees fallen over -- do they really think that I can't get national political news anywhere else? No, I know why they do it -- they are nannies of the worst sort, that have to spoon feed me the right true news, because they just know I'm not getting my recommended daily dose.

    I don't watch ESPN, but if they really do believe that you can't get the politics out of sports, they are deluded. I'd be glad to tell them why they are losing market share, but they don't want to hear it. They think they have to make up NEWS excitement, same as sportscasters have to talk talk talk even when the picture speaks for itself.

  13. I haven't watched ESPN for years. It's like watching a bunch of used car salesman with no more of an informed opinion then the average dude sitting next to you in a bar. The 24/7 "Is Favre going to sign or not" coverage complete with helicopter stalking was basically the last straw. Hey let's turn the whole country against atheletes by making them sick of hearing their names. They're a bunch of no talent hacks.

    1. I hope the network dies a firey death.

      It was nice back in the day when they had actual random sports - strongman competitions, lumberjack competitions, speedboat racing - in the downtime between major sports instead of talking heads. I won't miss the lefty bias at all.

      Unrelated, so glad to see Phil Simms got the hook as well. He wasn't annoyingly political, just annoyingly know it all.

  14. "He repeated his assertion that disentangling sports and politics was a "fool's errand" while acknowledging that looking back at the last 20 years of ESPN's flagship news show Sports Center it was "noticeable how little politics and culture intruded into the tsunami of highlights and witty banter that once marked that show."

    In other words: it can be done, but piss off, we have no interest in doing so.

  15. I stopped watching ESPN when they put that cunt woman in the Sunday Night Baseball booth and when they hired that uppity nigger black man to spout his outrageous communist proggie pronouncements.

  16. ESPN is run by idiots. They see the subscription drop and act like "We never should have let Olbermann get away!"

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