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The Real Story Behind ESPN’s Wednesday Massacre
You also can place this at the feet of the sports leagues and conferences. When you try to pander to that segment of the population who instinctively hate sports, you drive away your traditional customers and change your product to please your new customers. It's unworkable...FTFA: [Federalist] ESPN, the self-proclaimed worldwide leader in sports, became the worldwide leader in sports layoffs on Wednesday morning after news leaked that the cable network was in the process of laying off 100 staffers, most of whom are reported to be on-air talent. The layoff reports came as no surprise to those who have followed ESPN and its on- and off-air struggles to profitably provide the kind of content that most sports fans want to watch. Shortly after the mass layoff reports were confirmed, the Internet hot takes began. ESPN is failing because of cord-cutting, because it has too much politics, because it has too little politics, because sports fans are racists, you name it. So what’s the real reason the network felt forced to slash its payroll overnight? There is no one reason. There are a number of factors, each of which has been multiplied by poor strategic decisions. ESPN would have you believe that the network is a victim of circumstances, caught up in an industry whirlwind over which it has no control. Maybe, but that’s hardly the whole story. The real reasons aren’t all that complicated, but they’re not as simple as much of the social media hand-wringing would have you believe. ESPN isn’t struggling because of one thing. It’s struggling because of a bunch of different things happening simultaneously. Some are outside of its control, and some are not. Here are the big reasons for these mass layoffs. 1) ESPN Overpaid for Broadcast Rights In a nutshell, ESPN committed to paying massive long-term fixed costs for the right to air professional sports events, namely NFL and NBA games. Sports reporter Clay Travis of Outkick has been banging the drum on this score for quite some time, much to ESPN’s chagrin (Just last month Travis predicted Wednesday’s mass layoffs only to have ESPN sic its PR hounds on him and accuse him of making it all up). In accounting terms, the network committed to high long-term fixed costs (broadcast rights) in exchange for declining variable revenues (cable subscription fees and advertising dollars). You don’t have to be a mathematician to see the problems with this formula for success. Even if ESPN is making decent money right now, the music is eventually going to stop, people are going to stop dancing, and somebody’s going to be stuck without a chair. More at the link Posted by: badanov 2017-04-27 |
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