ESPN to Cut 500 Positions to Free Up Money for New Video Ventures
ESPN campus in Bristol (Courtesy of AP)
ESPN’s chief said the Disney sports-media division would eliminate 500 positions – 300 employees and 200 posts that are currently unfilled – in a bid to free up resources for streaming, digital and other kinds of video experiences designed for the new ways fans are engaging with sports.
ESPN has already made cuts in recent years as traditional ratings and subscriber numbers have fallen, noted ESPN President Jimmy Pitaro in a memo to employees issued Thursday. “We have, however, reached an inflection point,” he said. “The speed at which change is occurring requires great urgency, and we must now deliver on serving sports fans in a myriad of new ways. Placing resources in support of our direct-to-consumer business strategy, digital, and, of course, continued innovative television experiences, is more critical than ever.”
The New York Post previously reported on Pitaro’s memo.
The cuts are the latest sign of how ESPN, once one of Disney’s most stable assets, is working to recalibrate its operations as consumers abandon traditional ways of watching TV in favor of streaming video and mobile devices. ESPN has thrived for decades on the outsize fees it gets from cable and satellite distributors who carry its suite of sports networks. But as more fans cut their tether to traditional TV, its linear networks are starting to shed subscribers. Even as that happens, the rights fees ESPN must pay to broadcast NFL games, NBA matches and MLB showdowns are steadily rising, and many analysts expect the NFL to seek a significant price hike in its current efforts to renew carriage deals with many of the major networks, including ESPN. And the company is placing more emphasis on its ESPN Plus broadband service, even moving some of its higher-value web content under its pay umbrella.
ESPN has for months grappled with changes in its business. Indeed, the company has had a few round of layoffs before the coronavirus pandemic started. But the effects of the contagion on live-sports production has sparked new considerations of ESPN resources.
ESPN has during the pandemic figured out ways to get shows produced with staffers working remotely and methods of broadcasting games that can often rely on fewer people. While the new cuts are expected to affect staffers across the company, they are likely to include employees who have been involved in production of games and shows from behind the scenes.
“The pandemic forced ESPN to find new ways to cover sports and news that turned out to be cheaper and require fewer crews to do the job. Pre-pandemic, a crew was often sent to people’s homes or guests were flown into Bristol for live interviews. But now, those same interviews can be done for free using Skype or Zoom. Similarly, play-by-play and color commentary during games doesn’t have to be done with a full remote crew from the stadium. It can be done from ESPN’s headquarters, saving money on travel and production,” says Ben Bogardus, an assistant professor of journalism at Quinnipiac University. “While those methods may not be ideal, ESPN has found that viewers don’t mind that the shots don’t ‘look perfect.’ So a return to full-priced travel and remotes probably isn’t returning any time soon.”
Viewers will likely not notice any changes immediately, and the move is not expected to affect ESPN’s programming lineup. But the effort may have ramifications for contract renewals of on-air talent and may force executives to put more scrutiny on who is seen as most necessary to efforts as contract terms lapse. One longtime employee, Ivan Maisel, who has written about college football for ESPN since 2002, announced via Twitter Thursday that he had been informed his contract would not be renewed when it lapses at the end of the year.
Many parts of the Disney empire have been affected by the pandemic, including the company’s theme parks, ad sales and movie-release schedule. ESPN in April asked about 100 of its top-paid on-air sportscasters to take temporary salary reductions, along with senior executives.
Variety's Brian Steinberg contributed to this post.