ESPN, the giant of US sports television channels, has been losing subscribers by the millions while being clobbered by increasingly expensive broadcast rights.
The company must reinvent itself quickly to survive, but how?
Since its founding in 1979, in the town of Bristol, Connecticut, the world’s first broadcaster dedicated solely to sports has become a colossus, comprising multiple networks, platforms and 100 million subscribers.
However, the company — a subsidiary of Disney since 1996 — has faced headwinds since 2011.
ESPN on Wednesday announced a wave of layoffs, cutting about 100 positions, according to US media reports, including some on-camera personalities. The layoffs follow earlier cuts of 300 jobs in 2015 and 400 in 2013.
ESPN’s troubles are led by the continuing slump in subscriber numbers, down 9 million since 2011, even though the company still claims 90 million subscribers.
With each subscriber worth an average of US$9.17 per month, according to figures from analysts SNL Kagan, that equals a combined shortfall of nearly US$1 billion.
Many Americans subscribed to cable television out of habit for decades, paying for bundles of hundreds of channels, even though most only watched a few. Today’s TV viewers have options.
“Because of the maturation of streaming and the emergence of other sports channels, [ESPN is] in a much tougher situation,” said Andrew Zimbalist, a professor of economics at Smith College in Massachusetts.
He said ESPN is likely to lose 2 million or 3 million more subscribers each year for the next five years before the slide slows.
Fees for broadcasting rights have exploded at the same time, increasing by 54 percent in North America from 2010 to 2014, according to an October 2015 study published by PricewaterhouseCoopers.
It expected those fees to more than double between from 2010 to this year.
ESPN signed a 10-year contract for the rights to the National Football League’s Monday night games and several other events in 2011 for US$15.2 billion.
And a new contract with the NBA professional basketball league took effect this season, valued at US$12.6 billion over nine years.
However, “changing consumption habits” means trimming costs will not be enough to get the company through its rough patch, ESPN president John Skipper said.
He has negotiated agreements with most of the online streaming services to have launched in the US, including Sling, Hulu, YouTube TV and Playstation Vue. Those services offer selections of fewer channels, known as “skinny bundles,” for significantly lower prices than traditional cable-TV packages.
Disney in August also took a 33 percent stake in BAMTech, a subsidiary of Major League Baseball that has become a big player in online video streaming.
And ESPN is set to launch a fully online offering later this year, based on BAMTech technology, Disney CEO Bob Iger said.
Even with all those initiatives, “the best ESPN and Disney can hope for at this point is slowing the decline,” said Jan Dawson, chief analyst at Jackdaw Research, adding that the average income per subscriber will probably decrease as well.
Broadcasting rights remain extremely expensive and margins will continue to shrink, which is why ESPN must control its headcount, one of the cost factors it can still control.
“They’ll have to lay off more people, I’m sure, in the coming months,” Zimbalist said.
With the outlook bleak for the foreseeable future, some analysts and observers, including media mogul John Malone of the Liberty Media group, have called for Disney to sell ESPN.
That prompts the question of who would buy it, which has no obvious answer.
“There are fundamental issues here that any new owner would need to deal with, too,” Dawson said.
As they celebrated Naomi Osaka’s victory in the final of the US Open in New York City’s Flushing Meadows on Saturday, Tokyoites were eager to embrace their heroines’ stand against racial injustice. Osaka, who won her third Grand Slam title with a victory over Victoria Azarenka, has used her platform to support the Black Lives Matter (BLM) movement, wearing a mask bearing the name of a different African American before each of her seven matches in the championship. She had donned masks bearing the names of Breonna Taylor, Elijah McClain, Ahmaud Arbery, Trayvon Martin, George Floyd and Philando Castile. On Saturday, she walked
KEY GOAL: Taiwan’s Hsieh Su-wei is now free to focus on taking her fourth doubles title of the year with Barbora Strycova; they are due to face Nao Hibino and Makoto Ninomiya Taiwanese No. 1 Hsieh Su-wei on Monday returned to the court for the first time since the COVID-19 pandemic shut down the WTA Tour, falling to a 6-3, 6-1 defeat to US Open quarter-finalist Elise Mertens, who made a solid transition from the hard courts in New York to the clay at the Internazionali BNL d’Italia in Rome. “I’m not sure how well I adapted, to be honest,” Mertens told the WTA Web site. “I just feel like I might still be struggling a little. It was also [Hsieh’s] first match of the week, so that was a bit of an
THOROUGH THRASHING: Hualien City beat Taichung Blue Whale 2-1, ending their three-year winning streak with one round of matches left and eight points to spare Hualien City on Saturday clinched this year’s Taiwan Mulan Football League title with one game to spare, by beating Taichung Blue Whale 2-1 at Fu Jen Catholic University in New Taipei City. Hualien City have scored 38 points this season. Blue Whale are second on the scoreboard with 30 points, while Taipei Bravo are third with 23 points. One final round of matches is to be played on Saturday. It is the fourth league trophy for Hualien City, and ends Blue Whale’s three-year winning streak. Hualien had won the title from 2014 to 2016. Both teams defended well, leaving few chances in front
‘FUN TIME’: Denver’s Nikola Jokic said that his team would not accept that anyone else is better than them and the opposition need to play much better than they do Just about everyone had LA versus LA written in for the NBA’s Western Conference finals, but the resilient Denver Nuggets have crashed the party. Behind Jamal Murray and Nikola Jokic, the Nuggets advanced to the conference finals for the first time since 2009 to face LeBron James and the Los Angeles Lakers. Game 1 is scheduled to be played tomorrow. This was no ordinary road. The Nuggets fell behind 3-1 in their first-round series against the Utah Jazz before bouncing back with three straight victories. Then they went down 3-1 to the Los Angeles Clippers in the second round before winning in Game 7