Concerns about ESPN’s costs have played a big role in worries about parent corporation Disney’s stock price, so it seems not entirely coincidental that the latest round of Bristol layoffs is expected to be largely done by the next Disney earnings call on May 9 and the upfront presentations to advertisers on May 16. This round of layoffs is anticipated to hit 40 to 50 people and focus on on-air (and digital) talent, and it’s projected to reduce ESPN’s payroll by tens of millions. A further indication of speed here is that this round of cuts may include buyouts of those still under contract, a rare move for ESPN. Richard Deitsch of Sports Illustrated has more details on the timing involved and the buyouts:
Sources tell SI.com that ESPN management expects to finish most of its job cuts prior to the company’s upfront presentation for media buyers on May 16 and possibly by May 9, the date of Disney’s second quarter earnings call.
Last month SI reported ESPN was undergoing significant cost-cutting on its talent side (people in front of the camera or audio/digital screen). Multiple sources said ESPN had been tasked with paring tens of millions of staff salary from its payroll, including staffers many viewers and readers will recognize. Jim Miller, the author of the oral history of ESPN, said he believed the number of staffers impacted would be between 40 to 50. Those with contracts coming up would be particularly vulnerable. The company is also expected to buy out some existing contracts, which is something rare for ESPN historically beyond a few NFL talents.
On Sunday morning, an ESPN spokesperson declined comment.
It’s particularly interesting that ESPN would contemplate buyouts. Those have been seen across the journalism industry in recent years, especially in newspapers, and they’re a step usually made to quickly improve the balance sheet even at a risk of waste (paying people to leave early means you’re paying them not to work). ESPN hasn’t usually done that, and a big reason why has been the company’s previously-solid financials, which have put them in a better position than the newspapers that have opted for quick-turnaround-buyouts. ESPN has opted not to renew contracts in many cases, but they’ve typically gotten as much value as possible out of the remaining time on those contracts.
There’s been more and more focus on ESPN’s bottom line recently, though, thanks to exploding rights fees and downturns in subscribers, and that keeps coming up in these Disney earnings calls. If they do move to buyouts, that suggests they’re perhaps more concerned about the immediate financials than they are about maximizing the value of their current contracts. And the numbers of employees expected to be impacted here and the projected tens of millions in payroll reduction could make this latest round of layoffs a big change for ESPN.
The network’s bottom line may look much healthier after these staffing cuts, especially as payroll has long been a target for critical analysts. However, the question is if they’ll be able to maintain their quantity and caliber of coverage (and thus, their audience, and thus, their subscription and advertising revenue) with so many less people. And this is not the first massive paring down of ESPN, either; they laid off 200 to 300 employees in 2015, and cut hundreds more back in 2013. We’ll see how it plays out.