The holiday season is here so what better time to fire a bunch of people? ESPN President John Skipper sent a memo to ESPN employees this morning letting them know that 150 of their fellow employees are getting fired today. Cord-cutting plays a big role in the latest ESPN layoffs.
“The majority of the jobs eliminated are in studio production, digital content, and technology” Skipper explained as he set the layoffs in the context of ESPN’s struggling business. “They generally reflect decisions to do less in certain instances and re-direct resources.”
Cord-cutters have undermined the sports network’s business model. ESPN spends big to lock up broadcast rights for professional sports. It signed a $15.2 billion deal with the NFL in 2011 to keep Monday Night Football alive through 2021. And that is just the tip of a very big iceberg. In the past ESPN could get away with it because all cable subscribers, sports fans or otherwise, had ESPN’s fees built into their monthly charges.
That formula no longer works. Business Insider reported in September that ESPN lost nearly 16 million subscribers in the last six years. Based on the $7.21-per-subscriber fee ESPN charges cable companies, cord-cutting costs ESPN more than $115 million per month.
The latest layoffs are just a small part of ESPN’s efforts to revamp its business. The payments ESPN makes to the NFL and other leagues remain sky-high even as subscription revenues keep falling. Expect to see more bad news for ESPN staffers in 2018.
Chris Casper is a former tech industry product manager who escaped from California for New Mexico. Now he writes about science and tech while searching for the perfect green chile sauce.