ESPN On-Air Talent About To Care About The Cord-Cutters The Execs Aren't Concerned About
from the disconnect-over-the-disconnecters dept
It's been more than a bit perplexing to watch ESPN, sports television giant though it may be, shrug its shoulders at the cord-cutting trend that has refused to bend to the network's pleasure. With streaming being a thing, and that super-charging the cord-cutting revolution, we've made the point for some time that the sports broadcast industry was eventually going to feel the grip of fewer subscribers, as has been the case with much of the rest of the television medium. Yet ESPN barely reacted at all to cord-cutting, other than to insist that established ratings systems are crap and that its loss of millions of subscribers over the past few years was of no concern, mostly because those subscribers were poor. ESPN President John Skipper said just last year:
People trading down to lighter cable packages. That impact hasn't leaked into ad revenue, nor has it leaked into ratings. The people who’ve traded down have tended to not be sports fans, and have tended to be older and less affluent. We still see people coming into pay TV. It remains the widest spread household service in the country after heat and electricity.
Yet those comments came almost immediately after a huge round of layoffs at the network in 2015, trimming the behind-the-camera staff to what is essentially a skeleton crew. Still, stock prices stalled for Disney, with much of the blame being placed upon ESPN's subscriber loss. Some market experts have made some rather bold predictions that the subscriber woe for ESPN is over-hyped, even going so far as to predict massive market gains for Disney this year. That optimism seems to be largely built on the recent investment ESPN has made into digital distribution and streaming options. But if anyone out there is buying such optimism, the executives at ESPN do not seem to be among them.
Richard Deitsch at Sports Illustrated has a detailed write-up of ESPN's plans for its on-air talent in 2017 and it certainly looks like that talent is going to have reason for concern about cord-cutting that the executives lack.
SI has learned that ESPN will have significant cost-cutting over the next four months on its talent side (people in front of the camera or audio/digital screen). Multiple sources said ESPN has been tasked with paring tens of millions of staff salary from its payroll, including staffers many viewers and readers will recognize. Those with contracts coming up would be particularly vulnerable, sources said. The company is also expected to buyout some existing contracts, which is something rare for ESPN historically beyond a few NFL talents. The cuts are expected to be completed by June. Sources within ESPN say that there is no set list of names yet and stressed that behind-the-scenes people will likely (key word) not be impacted by these cuts.
Last month Reuters reported Disney had a lower-than-expected quarterly revenue, hurt by the drop in advertising revenue at ESPN. In addition, ESPN continues to shed subscribers at an enhanced rate, down to 88.4 million households in Dec. 2016. That number was 100.002 million in Feb. 2011.
It had to happen eventually. A network can't drop subscribers at rates in the double-digits without eventually taking a hit on the ad-revenue. Couple that with the sports licensing landscape in which partnering with teams and leagues has never been more expensive and it becomes difficult to see a way out this wilderness for ESPN. And, if this seems like a terrible trend for a business generally, it's particularly bad for a brand like ESPN, whose on-air talent has always been a key part of its success. The network likes to argue that it makes the talent popular and not the other way around, and it has some recent examples that demonstrate this to some degree, but the truth is that the talent and the network are more symbiotic than that. There's a reason why the retirement of Chris Berman, annoying slogan peddler though he may be, is such a big deal. He's been a titan for the network. Replacing that while cutting pay for the on-air talent is a unenviable task, to say the least.
And, just to be clear, this is mostly to do with cord-cutting and the numbers we're talking about are enormous.
The most immediate causes of the layoffs are clear. Over the last several years rights fees have skyrocketed, with ESPN now paying over $3.3 billion annually just to broadcast the NFL and NBA. Simultaneously, ESPN’s subscriber count and viewership—the fabled dual revenue stream that has made it the most envied television company in the country—have tumbled. While the loss of 12 million subscribers over five years is mostly due to generalized cord cutting, and not subscribers specifically dropping ESPN, it doesn’t really matter: It still amounts to losing almost a billion dollars annually. The status quo is unsustainable, and with rights fees already locked in for several years, salaries are one of the biggest areas available to cut expenses.
This how media giants die. Not quickly, or with mercy, but rather by being slowly bled to death by the reality of new times and un-adopted innovation. Sources from inside the company suggest ESPN execs weren't even discussing the cord-cutting trend until 2015. It seems that may prove to have been too late to right the ship in Bristol.
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Filed Under: cord cutting, espn, layoffs
Companies: disney, espn
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Yawn
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Re: Yawn
They're also facing competition from other sports networks: NBC's and Fox's are carried on my cable system as part of the "basic extended" package. Meanwhile, that same package is dropping ESPN News and ESPN Classic in April. So while all of us will still be counted as ESPN subscribers, we'll have half the ESPN channels and some of us will no doubt migrate to the other available choices.
If ESPN would sell me an a la carte package for the events that I want to stream (women's/men's college basketball, college football, certain MLB teams, certain NFL teams, no NBA, no NHL) where I could pay $1 per event, I'd probably buy it. A rough guess based on the last year suggests they'd make $300 off me: I follow two basketball programs and both their men's and women's teams, so figure 25 games from each of those is 100 events; I follow 2 MLB teams, so figure 50 games each for another 100; I follow 2 NFL teams, so figure 30 games there; and I follow several college football teams, call it 50 games, and then add in 20 more for playoffs/tournaments.
But it'd have to be $1. I'm not paying $4.95 to watch a game: that adds up to way too much. And if they want me to subscribe to a team's season, then it'll have to be less than $1, because I can't watch all the games.
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Because when you're losing people that fast, every .002 million (2,000) people counts.
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How
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Re: How
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Re: Re: How
Higher price and bandwidth caps.
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Re: Re: Re: How
I just moved from an area with an independent, local ISP, Charter, and Google in competition with one another to an area with Comcast and AT&T in no-competition. It's $10 more for me to make the statement "cord-cutting is real," but I'd have to pay more, if I really wanted to watch TV "their way."
Funny, the cap I had with Comcast over a year ago in Atlanta was 300GB/mo. I now live in the stix, and the cap is 1TB/mo.
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Re: How
That right there is probably one of if not the biggest reason that they haven't lost even more people, the fact that they price internet and cable as cheaper than just internet service.
Make it so that people can get internet as a stand-alone and cheaper and I imagine a significant number of people would drop cable in a heartbeat, the 'problem' is that losing so many 'watchers' would make charging the same or more for advertising for cable a tricky proposition, which is why the companies offering both make the 'bundle' cheaper than the individual service, because they'd be hurting even more otherwise.
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Re: Re: How
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Re: Re: Re: How
Quite right. Slap the customers with caps and throttling and if they do try to get their entertainment from another source then they still end up paying the cable company.
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Re: How
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Re: How
You are misled to believe that it is more. But you are not paying taxes, broadcast fees, sports fees, additional outlet fees, etc. on pure internet.
This saves $30 or more.
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Re: How
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Re: How
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Re: How
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Re: How
Has this happened to anyone? I haven't been charged by Comcast for months and my internet still works. I check my bill constantly and they even told me that it was off. I didn't correct them because I love free shit.
But do you guys have any suggestions?
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Re: How
That bundle was cheaper then Internet only so I got it. Do I use it? Not really. The cable Box is still in the packaging. I have never hooked it up as I would have to run a new cable for it and why? I'm still using my Antenna with TIVO to get most of my TV. I don't need the cable box for that. As for HBO, I just use one of my streaming Devices. Comcast doesn't allow me to use the Tivo Box, so I can use HBOGo on my AppleTV's or ROKU's. So that's not a big deal.
I'm still paying a little more then I was when it was Internet only. My speeds are also a little slower then they were. But more then fast enough. Where I was paying $50 a month for 100Mbps download service only, I'm now paying around $66 or so for what I have now with 75Mbps Internet. I rarely use HBOGo.
It's not really cutting the cord now, but it's as close as I can get. If I can go back to Internet only for cheaper once again, I will. I'm not paying for ESPN though in my small bundle.
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Pun-ishment
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Here's the comment on that Masnick blocked back on his CIA Leak Shows Mobile Phones Vulnerable, Not Encryption:
Apparently, from lack of mention here, you're okay with the CIA fomenting civil war in Syria, supporting actual terrorists who used the chemicals (and you believe the NYT claiming that was Assad), but OMG, my precious app is compromised!
What the hell do you think "smart" phones are for except a 1984 telescreen that you voluntarily carry around everywhere? We are IN the dystopian future, kids.
Basic problem is the uncontrolled deep state -- and you're siding with it against Trump! I suppose here at Techdirt, you'll deny that even exists, still believe that the Russians (with their puppet Trump) are the threat, not the 850,000 spooks in "Top Secret America".
Now, I bet's there's zero agreement to my points from Techdirt regulars, this is such a WEIRD site compared to The Register, so have at it.
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I'm tired of Masnick's hidden censoring of comments (also of his tactic of delaying their appearance). This is a public site, not Masnick's alone: if he doesn't want adverse comment, he can take down the public comment box.
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Re: Here's the comment on that Masnick blocked back on his CIA Leak Shows Mobile Phones Vulnerable, Not Encryption:
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Re:
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Re: Re:
As a long-time sports (pro and college) fan, I'm starting to feel that consuming media "sports entertainment product" is a suboptimal use of my time and to contribute money to the pockets of franchise owners, agents, and the 'governing bodies" of faux-amateur sports empires is stupid and might even be wrong on a moral level.
Comcast is going to bugger me no matter what, and I think they view "cable basic" as a bit of olive oil. If you know what I mean.
*-Seriously, I didn't mean to put down pigs.
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Number of Subscribers vs. Number of Viewers
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“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
We need those numbers to have a complete picture and Nielsen should have them.
Yeah, funny thing about that, last time Nielsen mentioned the increasingly lousy numbers ESPN threw a fit, insisting that the numbers Nielsen had were 'wrong', to which Nielsen went over their numbers again only to respond that no, they got it right the first time.
ESPN doesn't want the numbers, and they certainly don't want anyone else to see them, as they aren't nearly as 'promising' as the empty PR tripe ESPN is constantly throwing out to pretend that business is better than ever and they're just rolling in the money and viewers.
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Re: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
They don't count:
Cordcutters sharing their parents' accounts (who are still watching ads)
Cordcutting services such as Sling, Vue, DirecTVNow, etc. Nielsen has no way of counting these yet.
Nielsen is saying, "We are correctly counting traditional OTA broadcast and cable/satellite subscribers."
ESPN is saying, "A lot of cordcutters still watch us and we would really like those numbers to be included when calculating ad rates."
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Re: Re: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
That sucks for ESPN, since Nielsen lacks the ability to properly account for those cordcutters. How would it even measure such things? Would it use estimates that weigh in favor of ESPN's "alternative facts"?
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Re: Re: Re: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
Maybe Neilsen can't, but cable companies with digital systems get data on everything you watch (i.e. they can see what channel each digital box is tuned to). I'd be surprised if they're not already using these numbers to negotiate lower rates from ESPN.
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Re: Re: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
However, I suspect that a large number (not saying majority, but certainly a sizable number) of ESPN's subscribers have historically been people who didn't watch but still had it as a mandatory part of their cable package. Keep in mind that the networks charge the cable providers for the right to carry their channels. That means that ESPN gets a cut of each of those cable subscription fees.
So while ESPN may be keeping it's viewership numbers up, it's loosing out on money from those subscriptions. And THAT is what is starving the company. Even if ad revenue is constant because viewership is constant, the subscription revenue is falling.
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Re: Re: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
That strikes me as "These are the numbers we have, and they aren't good." "You should take into account the numbers you don't have though, they're much better."
If Nielsen doesn't have the numbers for people that cut the cord but still watch in other ways(and I'd be curious to know how ESPN tracks those numbers) then it would be rather absurd to try and incorporate what they don't have into their numbers.
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Re: Re: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
Except ESPN isn't available on any of these cord cutting alternates. So it doesn't matter that they don't count in the ratings.
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Re: Number of Subscribers vs. Number of Viewers
^ This, exactly. They would be in a much better financial situation right now if they'd have been willing to "lose" some of those bidding wars.
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Circuit City got rid of its "talent."
Where iz they now?
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Re: Circuit City got rid of its "talent."
It's why too many employees do a half-ass (or worse) job these days - they don't care, they're not paid to. If you complain, they'll look you right in the eyes with a bored look and tell you to take your complaint to someone earning more than minimum wage.
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Viacom is looking to be the canary in the mine
I'm not about to reconnect cable just for comedy central.
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Re: Viacom is looking to be the canary in the mine
Mr ESPN: I'll tell you, my boy, being on cable is where it's at. Get off of that stupid internet it's for losers.
Mr Viacom: Wow you are sooooo smart Mr ESPN you have so many subscribers and I want to be just like you - Gets back to the office and declares: SHUT DOWN ALL OF OUR STREAMING; WE'RE GOING TO BE ON CABLE EXCLUSIVELY
Writing on the wall: Death to both.
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Re: Viacom is looking to be the canary in the mine
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Essentials of life
This is totally sick if true. TV, Entertainment, and ESPN is a luxury.
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From the ashes of the legacy players will rise the new age. Good riddance.
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If you could destroy or profit and still bonuses... why would you care that much?
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Death by...
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"We're poised for success... There will be no raises because it will be a difficult year."
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Political stance
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Re: Political stance
I'm not going to watch this crap. That's exactly what it is. Turned Sports Political. No thanks. So now I just don't watch any sports, period.
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Re: Re: Political stance
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