ESPN Cuts...

Has sports media gone too far in chasing broadcast rights?

https://www.nytimes.com/2017/04/26/sports/espn-layoffs.html?_r=0


"ESPN on Wednesday began another round of layoffs, this one aimed at on-air personalities, perhaps the starkest sign yet of the financial reckoning playing out in sports broadcasting as cord-cutting proliferates.

ESPN is by far the biggest and most powerful entity in the industry, and it also may feel the sting more as viewers turn away from traditional ways of consuming live sports.

The network has lost more than 10 million subscribers over the past several years. At the same time, the cost of broadcasting major sports has continued to rise. ESPN committed to a 10-year, $15.2 billion deal with the N.F.L. in 2011; a nine-year, $12 billion deal with the N.B.A.; and a $7.3 billion deal for the college football playoffs, among many others."

I'm a neophyte when considering the business of radio, much less sports radio, but is this a portent of the distant future of "pay to play"? I.e., OTA (free to the viewer) broadcasts of NFL, MLB, etc. may eventually come to an end?

I thought ESPN was in the category of too big to fail, or untouchable when it comes to stuff like this. When I first read of layoffs, I was stunned.

ESPN's financial performance was a big beneficiary of the growth of cable television, and the trend towards 'cord cutting' is now having an outsize impact on its current financial performance. ESPN does, and will continue to, bring in a lot of revenue, but it's going to be less than it was in the past. ESPN lived large on 'per capita' assessments from cable companies which allowed the network to realize revenue from a lot of people that could care less about sports. ESPN will have to develop and market a product that will sell on an a la carte basis. Serious sports fans will pay up for it, but there are only so many of them, so the free riding revenue that set financial records in the past will be hard to match going forward. The company is therefore making necessary adjustments.

Not to mention the sports landscape, broadcast wise, is becoming more fragmented. Now Fox and CBS have cable sports nets. Rather than those being able to command carriage fees like ESPN had, the pressure instead has been to re-allocate what ESPN was getting to more networks because people are only going to pay so much per month for cable.

Thanks for the explanation. Really helps.

NBC also has a cable sports outlet!

max88 said:

NBC also has a cable sports outlet!

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As does CBS. Fox has several, including a bunch of regional sports nets.

Would it be smart for ESPN to merge their sister channels into the main channel and be better off.

TVCOOL said:

Would it be smart for ESPN to merge their sister channels into the main channel and be better off.

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ESPN's long-term contracts with pro and college sports entities would preclude that -- not enough room on one channel for all those live, must-carry events.

TVCOOL said:

Would it be smart for ESPN to merge their sister channels into the main channel and be better off.

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Uh, no. If they canned ESPNU or ESPN2 they would be unable to air a third of the games they are contracted to carry. Their college conferences and professional leagues would sue for breach of contract in a New York minute, and probably win big damages.

It might make sense for them to slim down their offerings, but they would need more than one to meet their commitments, as other posters have noted.

umfan said:

It might make sense for them to slim down their offerings, but they would need more than one to meet their commitments, as other posters have noted.

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I suppose ESPN Classic and ESPNNews might be expendable, but even those channels occasionally get live games -- or at least their opening minutes -- when games on ESPN and ESPN2 run long.

Or maybe when the college contracts runs out they will merge those secondary channels.

TVCOOL said:

Or maybe when the college contracts runs out they will merge those secondary channels.

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ESPN is locked into a lot of deals, pro and college, well into the next decade. It will have to figure out how to deal with cord cutting and hope that the something-for-nothing mindset of the millennials toward media content shifts. That attitude is causing misery for many media organizations, from newspapers to magazines to TV networks to websites. The internet generation has gotten the idea that a monthly payment to an ISP ought to be the only money it has to shell out for content, as if all the websites available through the ISP are somehow getting their share of that monthly payment.

It's the same stupidity that causes them to object to commercials on cable channels "because I'm paying to watch them." Well, a small portion of what they pay the cable company does indeed go to the cable networks, but that money alone doesn't come close to supporting those networks' programming and operational costs. You tell them that and they roll their eyes.

TVCOOL said:

Or maybe when the college contracts runs out they will merge those secondary channels.

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And then do what with those channels? They aren't the channels with the big costs, and they bring audience to the ESPN commercials.

BigA is correct, channels that primarily play prerecorded or archive content that ESPN already owns the rights to, are the least-cost channels to run.

Talent contracts, especially considering the number of them involved, are the low hanging fruit for potential cuts. The key is to parlay those savings back into tying up the various exclusive sports rights fees to ensure ESPN is the only place viewers, on line or cable, go for those sports. One doesn't need a panel of six pundits for every college football pregame and halftime.

Kelly A said:

One doesn't need a panel of six pundits for every college football pregame and halftime.

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That's exactly right. It was interesting to watch how NBC Sportschannel is handling the Stanley Cups, with the same team doing all pre-game and halftime. Seems to me the NCAA basketball playoffs were done by basically the same pundits across all channels. Fox FS1 has been using the MLB Channel guys for the past two years.