It was only 7 months ago that ESPN announced “notable” layoffs. Well, they’re at it again. DSLReports, who have never been big fans of ESPN, say that another 50-60 layoffs are coming, and this time it may be the on-air talent that gets cut.
ESPN has long been rumored to be the most expensive “basic” channel on TV, costing nearly as much as HBO and potentially costing average subscribers upwards of $25 per month. It, along with corporate sibling Disney, is a big part of why pay TV is so expensive, and those $100+ cable bills are a big reason why people are cutting the cord.
So, to boil it down, ESPN is what’s killing pay TV and the slow death of pay TV is killing ESPN.
OK, that’s a pretty harsh way of putting it, considering that traditional pay television is expected to continue on in one form or another for at least another 15 years, but there will have to be changes. Those big cable bills just won’t fly, and the rapid decline in subscribers reported by Comcast and Charter/Spectrum shows that when people have a simpler, less expensive alternative, they’ll take it. It also shows that ESPN is overvalued, as you’re seeing a lot of people happily living without it, or at least cutting down to only one ESPN channel. That flies in the face of traditional thinking, which said that you simply couldn’t succeed without ESPN.
Right now ESPN seems to be taking some tough steps to make sure it can survive drops in revenue. The channel is paid per subscriber, so drops in cable subscriber numbers mean drops in their bottom line. And make no mistake, cable numbers are dropping. Even once-bulletproof DIRECTV has recorded negative quarters, although nowhere near the bloodshed seen at Spectrum. Cord-cutters who pick up a live TV package traditionally only get one ESPN channel, and many more are enjoying the savings of having an antenna for live TV and getting everything else from a combination of Hulu, CBS All Access, and other on-demand apps.
ESPN isn’t just being cut out of the equation by cord-cutters, but by major league sports as well. It’s fully expected that every major sport will have its own streaming package fairly soon. Of course DIRECTV’s NFL Sunday Ticket package and baseball’s MLB.TV led the way, but there are constant rumors that other sports will launch live streaming apps, and after that you consistently hear that colleges and universities could start their own streaming sports networks, which would cut significantly into ESPN’s own SEC network and other college sports airing on ESPN.
Add to that all the regional sports networks and networks like BeIN Sport that cater to the kinds of niche viewers who once flocked to ESPN’s secondary channels. Put it all together and it’s pretty easy to see why ESPN is feeling the squeeze.
Don’t get me wrong, I’m not crying big crocodile tears for ESPN. The company has stockpiled cash for years. Disney is one of the biggest entertainment conglomerates on the planet. I’m not worrying about them running out of money. If they need to cut back a little bit, I’m just fine with that. How about you?