ESPN plans to lay off a still-undetermined number of its 1,000 or so on-air personalities and writers at its TV and digital units.
“We have long been about serving fans and innovating to create the best content for them,” the Disney-owned sports service says in a statement. “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.”
ESPN “has been tasked with paring tens of millions of staff salary from its payroll,” says Sports Illustrated, which first reported the layoff plan. It noted that the cable programmer is “expected to buyout some existing contracts, which is something rare for ESPN historically beyond a few NFL talents.”
The plans come as ESPN grapples with declining subscriptions and growing competition, for example from Fox’s FS1. ESPN’s ad revenue fell 7% in the last three months of 2016.
Ratings fell for SportsCenter, and for Monday Night Football, but the quarter also was hit by the shift of three College Football Playoff games into the current quarter.
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Disney CEO Bob Iger says he’s still upbeat about ESPN’s prospects as it expands to digital platforms including DirecTV Now, and plans to launch its own direct-to-consumer offering later this year.
“The most important thing for ESPN is to continue to support and nurture their program offerings,” he told analysts last month.
Still, ESPN “remains the key investor concern that Disney management simply cannot shake loose from, no matter how hard they try to downplay it,” BTIG’s Richard Greenfield says.
Disney’s cable networks, dominated by ESPN, account for about 40% of the company’s operating income.
But ESPN’s subscribers, as measured by Nielsen, fell to 90 million last year from 92 million in 2015.
ESPN challenged some of the subscriptions numbers that Nielsen reported on a monthly basis saying that they were “inconsistent with much more moderated trends observed by other respected third party analysts.” Nielsen stood by its estimates.
Meanwhile its outlays are rising for high-profile sports including NFL football, NBA basketball, Major League Baseball, and college sports.
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