ESPN made 2 critical mistakes, and now it's paying the price

[big dog cowboy]

ESPN made 2 critical mistakes, and now it's paying the price

By Jay Yarow

Last week ESPN cut 300 employees.

Layoffs are always hard, but these seemed to be particularly painful for people at the company.

Charley Steiner, a former ESPN employee, said on Facebook: "This week, many of the men and women who provided the foundation, balance, direction and creativity to this iconic franchise were called into someone’s office and occupationally and emotionally executed."

He said ESPN's cuts were "Not just fat. Not just muscle, but down to the bone."

Why did ESPN, which is still richly profitable, feel compelled to cut so many people?

John Ourand at Sports Business Journal has the best explanation.

He says it comes to down two big problems for ESPN.

1. ESPN is losing subscribers.
2. ESPN is paying an obscene amount of money for sports.

ESPN is losing subscribers because of a critical mistake it made in 2012 when it was negotiating carriage deals with cable companies like Comcast, Cablevision, and Cox.

According to Ourand, ESPN was negotiating for a $6-per-subscriber fee from the cable companies. To secure that high of a fee, ESPN had to be flexible on its "penetration benchmark levels," or the number of homes that cable companies guarantee ESPN will be in.

At the time, ESPN was guaranteed to be in 90% of cable subscribers' homes. To get $6 per subscriber, ESPN lowered that threshold to 80%.

When ESPN lowered the standard, it allowed cable companies to start introducing new cable packages that excluded ESPN. People are signing up for those cable packages, leading to ESPN's losing 8.5 million subscribers over the past four and half years,according to Ourand citing Nielsen estimates.

This falls in line with the numbers we collected recently. After three decades of growth, ESPN's place in the American home is slipping.

Read more and a couple of great graphs: http://finance.yahoo.com/news/espn-made-two-critical-mistakes-132855270.html

 

[blindzebra]

It goes beyond that, their programming has slipped badly.

In its prime you had Dan Patrick and Keith Olbermann leading the way with humor and intelligence...they tried to continue that but all you got was schitck and too much Chris Berman. All of the programs are redundant they talk about the exact same thing from First Take, Around the Horn, to Pardon the Interruption. And when they do have someone marginally entertaining they lose them to other networks.

 

[Silver Surfer]

There are a myriad of reasons, but the loss of Keith Olberman is not one of them.

 

[Tusan_Homichi]

There are a myriad of reasons, but the loss of Keith Olberman is not one of them.

Before he became a polarizing figure because of his politics, he was a big reason why ESPN gained in popularity. He and Dan Patrick were easily the best Sportscenter duo.

 

[Fletch]

Getting rid of Colin Cowherd has hurt them. I know lots of people around here don't like Colin, but the guy has talent and is very intelligent. The Herd on ESPN was very fluid.

 

[Future]

The mistake they made was turning themselves into an entertainment network.

Everything else would work itself out just fine if they stuck to what worked for so many years.

 

[StylisticS]

Before he became a polarizing figure because of his politics, he was a big reason why ESPN gained in popularity. He and Dan Patrick were easily the best Sportscenter duo.

Yep agreed. Always looked forward to watching those two on sportscaster. I also think ESPN did a great job with NHL back in the day with Gary Thorne. ESPN has become to much like Bravo the last decade. They even had a reality show.

 

[Silver Surfer]

Before he became a polarizing figure because of his politics, he was a big reason why ESPN gained in popularity. He and Dan Patrick were easily the best Sportscenter duo.

Thanks for the history lesson. I started watching in 1982, three years after it began. KO didn't arrive until 10 years later.

 

[TheBigEasy]

One person has killed ESPN for me - Stephen A. Smith

I'll refrain commenting any further so not to be banned for obscenities!

 

[DFWJC]

Well, they did just have Kornheiser and some other guy agree the other day that the tea party could be compared to ISIS.
So I'd say they've stepped out of their topic wheelhouse at times too.

Too much power, or perceived self importance--can lead you down a bad path.
Ask Keith Olbermann.

 

[Rogah]

It'll be interesting to see how ESPN handles their next contract with the NFL. They need the NFL, but if they can't afford it then they can't afford it.

 

[StarHead69]

Seems to me that over the last decade, they shifted from highlights and X's & O's to drama and their own egos. I honestly never watch anything but actual sporting events on that network. The other shows are unbearable.

 

[dogunwo]

ESPN may have too many channels. it dilutes the programming and I don't know what their financials look like to be able to justify the cost of keeping those channels. Time to get rid of ESPN 8 "the Ocho"

 

[PA Cowboy Fan]

It'll be interesting to see how ESPN handles their next contract with the NFL. They need the NFL, but if they can't afford it then they can't afford it.

Then I won't be watching it much at all. The only other thing on it I watch is college basketball and only when my team plays.

 

[RonSpringsdaman20]

It'll be interesting to see how ESPN handles their next contract with the NFL. They need the NFL, but if they can't afford it then they can't afford it.

If disney wants to keep it... Espn will keep it.

 

[Rogah]

If disney wants to keep it... Espn will keep it.

Well, duh. Disney owns ESPN so if Disney wants to keep it, they will keep it. Thank you, Captain Obvious.

What Disney wants is for ESPN to be a profitable, successful entity so Disney isn't going to want to keep it if it costs hundreds of millions of dollars more than it brings in.

 

[RonSpringsdaman20]

Well, duh. Disney owns ESPN so if Disney wants to keep it, they will keep it. Thank you, Captain Obvious.

What Disney wants is for ESPN to be a profitable, successful entity so Disney isn't going to want to keep it if it costs hundreds of millions of dollars more than it brings in.

I was being obvious on purpose because someone said ESPN may not be able to afford it.....

don't you have a team in Boston to root for?

 

[Rogah]

I was being obvious on purpose because someone said ESPN may not be able to afford it.....

I thought it was pretty obvious that talking about "affording" it in this business context means affording it within the context of maintaining profitability.

Unfortunately, things which are ridiculously obvious to some of us are not obvious and a complete mystery to others.

You know, like how it's obvious that people obsessively hate teams they are secretly just jealous of.

 

[RonSpringsdaman20]

I thought it was pretty obvious that talking about "affording" it in this business context means affording it within the context of maintaining profitability.

Unfortunately, things which are ridiculously obvious to some of us are not obvious and a complete mystery to others.

You know, like how it's obvious that people obsessively hate teams they are secretly just jealous of.

Look my man... I don't know you, don't care to...
I understand that Disney owns properties that they deem valuable to cross promote to the demographic that the NFL brings in.
Not to mention, Espn now produces all of ABC sports... regardless of what ABC network it broadcasts on. Monday Night Football has been in ABC family longer than Espn... so if Disney wants to keep it, they will...

As for you.... kick rocks.... you want to start something, and I don't know you... so go argue somewhere else...

 

[Rogah]

I understand that Disney owns properties that they deem valuable to cross promote to the demographic that the NFL brings in.
Not to mention, Espn now produces all of ABC sports... regardless of what ABC network it broadcasts on. Monday Night Football has been in ABC family longer than Espn... so if Disney wants to keep it, they will...

Yes, thank you, Captain Obvious, for now repeating the exact same statement you made before.

As for you.... kick rocks.... you want to start something, and I don't know you... so go argue somewhere else...

Dude, I was talking about ESPN/NFL when you jumped in with "don't you have a team in Boston to root for? " So don't pretend that I'm the one trying to start some sort of argument while all you want is to discuss the issue at hand. You only make yourself look foolish when everyone can see you making snide, sarcastic remarks then whining about me "wanting to start something".