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Last month, OutKick first reported that ESPN was bracing for major cost cuts, including the potential layoffs of hundreds of workers. Now, industry sources say that those layoffs are on the horizon. The Athletic reported today that they could begin as soon as Thursday.
ESPN currently has about 4,000 employees in Bristol, CT and another 2,500 employees in other offices across the United States and the world.
An ESPN spokesperson declined to comment for this story.
As we previously wrote, this news does not come as a major surprise to those who are following both the media industry and Disney in the pandemic. NBC Universal layoffs impacted up to 10 percent of their 35,000 employees, including many at NBC Sports. CBS News was hit with layoffs in May. Fox Sports laid off between 50 and 100 staffers in July. We could go on and on naming media organizations, both in and out of sports, who have had to slash their budgets lately.
The pandemic has affected many of Disney’s business operations, such as theme parks, cruises, movies and live sports. Though most sports leagues have been salvaged, there was some lost revenue in college football and other sports. As a result, Disney announced in September that it was laying off 28,000 park employees.
ESPN has also been slowly transitioning away from a business model that primarily focuses on cable TV, where they have been steadily losing subscribers since 2015, to the OTT streaming future. No one yet knows how long it will take to evolve. Earlier this month, Disney CEO Bob Chapek announced that the company would be focusing on its direct-to-consumer initiatives, which means a big push behind content on Disney+ and ESPN+.
ESPN has long been the bellwether of the sports media industry. Thus, news about turbulence in their business cuts through more than it does with other entities. ESPN had previously laid off about 300 behind-the-scenes workers in 2015 and and about 100 talents in 2017.
While every TV network has been affected by cord cutting, it hurts ESPN the most drastically because they have, by far, the highest subscriber fees. Between ESPN and ESPN2, they get over $10 per month per subscriber. Multiply that by 12 months per year and about 20 million subscribers and it is over $2 billion in annual revenue losses.
Even with this attrition, the Disney/ESPN/ABC conglomerate will be a formidable player in sports for years to come. They wrested the SEC Game of the Week package away from CBS and will air all the conference’s football games later this decade. They are trying to add a second NFL package, reportedly bidding aggressively to try to poach Sunday Night Football away from NBC. Their deals with the NBA and MLB are in good standing.