How It's Playing: ESPN Veterans Privately Question Net's Direction In Wake Of Layoffs
ESPN’s approximately 300-person layoff yesterday had veterans of the network "talking privately about whether the enterprise they’d helped to grow into a worldwide brand has lost its way," according to a front-page piece by Steve Collins of the BRISTOL PRESS. The net announced that it "would eliminate a number of jobs as part of some wide-ranging organizational changes." With the cuts, ESPN’s workforce in Bristol "will shrink to about 4,000 people, still more than the 3,800 promised when it got state aid in 2011 to help construct its new digital center" (BRISTOL PRESS, 10/22). In N.Y., Richard Sandomir notes ESPN "has about 8,000 employees" globally. The net, which "still attracts sizable sports audiences, has been coping with rising production costs and steep rights fees" (N.Y. TIMES, 10/22). ESPN VP/Corporate Communications Mike Soltys said that the net "isn’t providing numbers by office but did say about 200 of the total job cuts will be at ESPN’s corporate office in Connecticut." Soltys: "That leaves us 100 in other places including New York, Los Angeles, Charlotte, Austin and different places around the world" (AP, 10/21).
WHAT'S THE BIG IDEA? In L.A., Battaglio & James write although still a "highly profitable unit of Disney, ESPN has been under pressure to control costs because it no longer can depend on steady growth from its most reliable revenue stream: fees from cable and satellite subscribers." Fees for all of Disney's TV channels accounted for $10.6B in revenue during FY '14, and ad revenue "is also under pressure." ESPN "is also feeling the squeeze on the cost side as sports rights fees continue to escalate." Even with the cuts, ESPN said that there "are no plans to cancel programs or drop any on-air talent" (L.A. TIMES, 10/21). The HOLLYWOOD REPORTER's Marisa Guthrie cited sources as saying that the reorganization "will re-allocate resources to data automation and technology" (HOLLYWOODREPORTER.com, 10/21). In Hartford, Dan Haar notes an isolated layoff "is one thing, but this round of cost-cutting highlights the gradual transition toward a legacy-industry economy that ESPN inhabits -- further from the purely innovative, new economy in which it was founded" in '79. ESPN President John Skipper's letter confirming the layoffs "shows strong signs of the legacy issues." Along with language about "integrating technology and constant innovation, he zoomed in on the need to customize and personalize sales and marketing, and to change the network's distribution efforts -- indicating that the old model based on TV subscriptions and mass advertising are not sustaining the business" (HARTFORD COURANT, 10/22). VARIETY's Cynthia Littleton wrote ESPN "is one of the most valuable TV properties in the world but it is not immune to the turbulence in the domestic cable business." The cuts "may well be replaced in the coming months by hires with entirely different skill sets" (VARIETY.com, 10/21).