Back in 2015, ESPN cut an estimated 300 jobs from its roster. It was mainly due to increased rights fees and reduced sales revenue. Sports Illustrated reports that the Worldwide Leader will be undergoing a new set of layoffs over the next four months. The exact number is not known at this time, but SI reports that it will be “significant.”
In February, ESPN’s parent company Disney reported its first quarter earnings and they fell short of expectations. Much of the revenue shortfall came from its media networks and once again ESPN’s higher programming costs along with lower sales revenue were cited as the main reasons.
Richard Deitsch writes that “ESPN has been tasked with paring tens of millions of staff salary from its payroll, including staffers many viewers and readers will recognize,” meaning that these cuts will be on the talent side. In addition to the layoffs of existing on-air talent, there will be buyouts of some contracts. SI adds that the buyouts are rare so this is new territory for ESPN.
It appears that behind-the-scenes staff will likely be spared in the latest round of cuts. This round of layoffs is expected to be completed by June.
An ESPN spokesman gave SI the following statement in response:
“We have long been about serving fans and innovating to create the best content for them. Today’s fans consume content in many different ways and we are in a continuous process of adapting to change and improving what we do. Inevitably that has consequences for how we utilize our talent. We are confident that ESPN will continue to have a roster of talent that is unequaled in sports.”
One major factor for ESPN’s lower revenue is the fact that since 2011 when the network was in 100 million homes, it has lost subscribers and is now available in 88.4 million homes.
This is no doubt a big hit for ESPN. Sports rights fees are not going down, but up. The bubble is not bursting and as it charges pay TV providers more than $7 per subscriber, ESPN sees that its traditional model of advertising revenue and subscriber fees is being challenged. Whether ESPN chooses to develop a direct-to-consumer product or stand pat will be answered in the coming years.
But for now, it will have to endure a new set of layoffs.