Another round of ESPN layoffs has been announced, with employees to be let go between Thanksgiving and Christmas.
When media and sports are grouped together, there is only one company that comes to mind: ESPN (Entertainment and Sports Programming Network). The network, known for its top on-air personalities, special guests, and SportsCenter musical tune, is laying off more than 100 employers in late November or early December.
The ESPN layoffs will include on-air personalities, producers, executives, and behind-the-scenes employees including digital and technology employees.
This is not the first time that there have been layoffs announced within the company. Back in 2015, approximately 300 employees were given a layoff notice, which represented about four to five percent of the total workforce at the time. Just last year, ESPN layoffs included 100 employees.
Why So Many ESPN Layoffs?
It’s not that the product is bad or that there is a financial liquidity problem within the company, but rather the issue is cord cutting by the end customer. This is a result of owning legacy assets by ESPN, such as television assets, which are seeing less demand compared to past years.
In 2011, there were more than 100-million households that had services by ESPN. Today, that number is around 87.5-million.
Of course, the company could look for growth in other areas to offset the negative impact of customers cutting their services. But one issue that arises is that there are customers who have never purchased cable nor plan to ever do so. Therefore, there are no marketing opportunities to attract new customers.
What Does the Future Look Like for ESPN?
There could be more layoffs by the sports network. If customers continue to cut their cable, the business’s margins would be impacted. Therefore, the senior management team would have no choice but to cut overhead costs as much as possible.
As mentioned earlier, there are legacy costs such as the television network for ESPN. Since ESPN is such a powerful brand, it could mean there is a swift change in technology and it could use a new method to provide sports information to its end user. With this new method, there would still be a reduction in the overall headcount. This would be true because a more digital strategy requires fewer employees since most the work is done on the back end.
The company’s current atmosphere is not great for employees. One on-air personality said that the feeling within the company is “queasy.”
This causes another issue for ESPN, which is the stigma it is gaining by sports reporters, journalists, technology people, and the employment market. This could mean top-talented job-seekers are going to look to join other sports networks that are growing and have a better workplace environment.
Why Is the Network Waiting Until After Thanksgiving to Lay Employees Off?
ESPN is owned by Walt Disney Co (NYSE:DIS), which has an employee stock option. By waiting until after Thanksgiving to give the pink slip to employees, it will allow individuals getting laid off to get an additional year of their stock vested.
A vested stock plan is where the employer and employee themselves contribute to purchasing shares of DIS stock. An employee must wait a certain time period before getting access to the employer’s contribution of the share purchases. This is one favor that ESPN is doing for its employees. But looking at the big picture, it is only a short-term fix for employees being laid off.
This could only be the beginning of more change seen within ESPN’s culture, employee headcount, and strategy.
“More Significant Layoffs Are Coming to ESPN,” Sports Illustrated, November 9, 2017.