ESPN Layoffs 2017: Drop in Subscribers, Costly NFL Rights Force Job Cuts

ESPN Layoffs 2017
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Just a little over six months after Walt Disney Co (NYSE:DIS) gutted 100 of ESPN’s popular personalities from its famous sports channel, rumors of additional ESPN layoffs are making the rounds on the street. Once again, the channel’s declining subscriber base and its expensive sports deals may be to blame for the latest ESPN job cuts.

More ESPN Layoffs Expected in 2017

Inside sources have revealed to Sporting News that Disney may be planning more ESPN layoffs before the end of this year. The axe is expected to fall by late November or early December, souring the holidays for the dozens of employees who will be left out of work.

The sources have indicated that between 40 and 60 ESPN employees may be receiving pink slips this time. This round of ESPN layoffs is expected to affect both on-screen and off-screen employees. So watchers of the sports channel can expect that the latest ESPN layoffs list will include some more famous TV-faces, in addition to some behind-the-camera workers.

The latest round of ESPN layoffs is preceded by the first string of job cuts, which hit back in April when popular TV personalities were laid off by the sports media giant. About 100 employees, in total, were let go. The list of fired ESPN employees included prominent personalities like former NFL players Trent Dilfer and Danny Kanell, former NBA player Len Elmore, and famous NFL reporter Ed Werder.

Decline in Customer Base & Expensive NFL Deals Leading to ESPN Layoffs

ESPN layoffs are owed to the sports channel’s cost-cutting efforts that follow its declining subscriber base. ESPN has lost nearly 13 million subscribers in the past six years, and the drop in subscriptions is continuing.

Despite that, the sports channel continues to charge high subscription fees compared to most other cable channels. That’s because the channel has little choice but to charge high fees to pay for its expensive deals with major sports leagues.

ESPN has recently paid a whopping $15.2 billion to extend its deal with the NFL and another $12.0 billion for the NBA deal. But as numbers are showing, the channel is finding it hard to break even on these investments.

NFL ratings have significantly dropped this year, as viewership declined over five percent from the last season. Advertising revenue is consequently getting affected as advertisers find firm ground to negotiate fees or threaten to turn away.

ESPN Layoffs Part of Industry-Wide Downtrend Owed to Cord-Cutting

The loss in ESPN’s subscriber base is blamed on the rise of online streaming services, which are clawing away the market share of traditional cable TV. A growing number of American consumers, particularly the young millennials, are shifting to cheaper on-demand streaming services like “Netflix,” “Hulu,” and “Amazon Prime.” They are refusing to pay high subscription fees for TV channels, resulting in the phenomenon called cord-cutting.

Traditional cable TV channels are consequently losing millions to online streaming services due to the growing trend of cord-cutting.

Media giant Walt Disney Co, which owns ESPN, has likewise been shedding employees from its entertainment TV channels, primarily because of these cord-cutting pressures. About 200 Disney employees lost their jobs, mostly at the ABC network, just earlier this month.

As online streaming services begin to cut into its profits, Disney has likewise decided to launch its own movie and ESPN streaming services. It remains to see how that wager will turn out, but suffice it to say that the media company will continue to feel threatened as the new technology-based streamers disrupt its business.

As for the latest round of ESPN layoffs, those associated with ESPN’s flagship program, SportsCenter, are speculated to bear the brunt of the job cuts this time. The sports channel currently employs about 8,000 employees.

 

Sources

Sources: ESPN heading for more painful layoffs, SportingNews, October 26, 2017.

NFL’s TV numbers still sliding; 2017 figures down big from same period in ’15,” SportingNews, October 27, 2017.

Categories: Job Cuts, News, NewsArticle

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