ESPN Layoffs

[hakepb]

What the reason but just losses.

People cable cutting and ESPN being tied to cable or something?

Yes. ESPN is one of the biggest drivers in ever increasing monthly cable and satellites TV bills. (I think there been an $8/month per family going to ESPN for cable tv rates)

Many people are sick of those cable bills, and now that there are free HDTV (digital over the air channels without static and ghosting like old analog tv) and paid streaming services (Netflix, etc) a number of people are dropping their $100/mo cable TV bills.

And when people drop their cable TV, ESPN goes from $8/mo to $0/mo.

 

[dreiwhit]

3. Lack of money in the average pocket forcing cancellation due to the frivolity of it and the rise of mobile devises that take the place of cable.

That was the number one reason why we dumped our satellite TV service back in February. Two pay cuts in three years didn't leave a lot of extra money laying around for satellite TV. Plus, it wasn't worth it anymore. There was rarely anything worth watching.

 

[STLstone]

The delivery mechanism may change. The marketplace may shrink (fewer networks.) But there will still be many different networks/platforms, and there will be demand from people who want a variety of content bundled at an economical rate.



Not for live sports, though.

Netflix is a tough one to take-on in a quick forum post. The streaming service began as an aggregation of older content from dozens of networks. And they’re rapidly ditching that model, allowing contracts to expire (or having networks refuse to renew) at an alarming rate. Netflix’ commitment to original programming makes sense long-term, but it also makes them just another network.

In a few years when everyone from Disney to AMC to FX has its own standalone streaming products, people are going to start asking themselves if Stranger Things, Daredevil and Ozark are really worth $11 (or $12, or $15) per month when they could spend similar dollars to subscribe to a la carte services from 2 or 3 other networks.

And that’s not even taking into account Netflix’s financial position, which many have called into question given the rate at which they are burning through cash.

That statement might not hold true for long, though. It's been reported that Amazon and Facebook will be bidding on rights to the Premier League for soccer, so it's presumed that they and Netflix will be bidding on the major US sports contracts as they come available.

 

[bladiator]

That statement might not hold true for long, though. It's been reported that Amazon and Facebook will be bidding on rights to the Premier League for soccer, so it's presumed that they and Netflix will be bidding on the major US sports contracts as they come available.

My question is: if the weight of these pro sports contracts are killing ESPN as it loses subscribers by the day, how is it worthwhile to Amazon, Facebook, Netflix and the like? I know they all have money coming out of their ears, but why doesn't ESPN just start selling a streaming service apart from their cable channels to recoup some of the money from their ridiculous live sports contracts? (Perhaps they are contractually obligated not to do that, or know that it will eat from their own cable subscriber base).

Either way .... when Twitter bought Thursday Night Football last year (or before that) and now Amazon Prime has bought rights to it ... both times I thought to myself "....eh??" TNF is almost always the worst football ... seems like a lot of money for the worst slot.

 

[umichigan10]

That statement might not hold true for long, though. It's been reported that Amazon and Facebook will be bidding on rights to the Premier League for soccer, so it's presumed that they and Netflix will be bidding on the major US sports contracts as they come available.

Also YouTube and amazon already broadcast the occasional nfl game. It’s clear the nfl is experimenting with the idea, and I’m sure most other sports leagues are in similar vote

 

[umichigan10]

Either way .... when Twitter bought Thursday Night Football last year (or before that) and now Amazon Prime has bought rights to it ... both times I thought to myself "....eh??" TNF is almost always the worst football ... seems like a lot of money for the worst slot.

Gotta get your foot in the door somehow. The big networks hold the rights for the majority of the games for the time being, but if Twitter and amazon prove they can broadcast the product effectively, they might make themselves a serious contender next contract time

 

[tjkraz]

I honestly don't know anyone over the age of 25 that would even think of the turning on espn except for a live game...

I usually watch Pardon the Interruption evenings before the local news. Sue me.

Meanwhile nobody in my circle of friends is a religious watcher of Fox News, MSNBC, etc. But I’m not going to deny those people exist.

It's the streaming direct services from the leagues that are really doing the damage...

$100 - whatever they "adjust" it to that month for cable or satellite...
...or the entire season for $120 ish?

Yes and no. Those packages are subject to local blackouts so not really an option for people wanting to see their local team. League packages also don’t carry games broadcast nationally on networks like...ESPN.

They’re also more expensive than what a stand-alone ESPN service is likely to cost. Buying the full season of MLB and NBA season passes would cost about $350 per year or $30 per month. For two sports. An ESPN streaming product is likely to cost half of that, IMO, while providing FAR greater variety.

Before I paint myself as a card-carrying sports fanatic, I probably only watch 2-4 hours of live sports on ESPN per week. But I have a teenage son who likes University of Louisville athletics and KC Chiefs. I have a teen daughter who plays high school volleyball (NCAA VB is readily available via ESPN live or streaming) and likes the Golden State Warriors. I have a wife who likes Duke and Notre Dame.

Cord cutting is going to continue. No question of that. But let’s not pretend that the world is divided into two groups: those who have already cut the cord and those who are too naive to have discovered cord cutting yet. ESPN is typically among the top 5 most watched cable networks in cumulative monthly ratings and individual events often top nightly ratings among all cable nets.

So I'm in the podunk market directly between New York and philly...small
Rural areas. (That's sarcasm...bout 20% of the country's population is within 100 miles)

Anyway...cablevision was in a dispute with espn a couple of years ago and nobody could be bothered...

Except for the 80-100 times per year when ESPN is the only place to watch the Yankees/Mets/Phillies/Knicks/76ers/Jets/Giants/Eagles/Syracuse/Villanova....

 

[tjkraz]

That statement might not hold true for long, though. It's been reported that Amazon and Facebook will be bidding on rights to the Premier League for soccer, so it's presumed that they and Netflix will be bidding on the major US sports contracts as they come available.

And that competition is a big part of the reason ESPN was forced (obligated?) to enter into these expensive agreements. ESPN *IS* live sports. Sports highlights and talking head shows don’t draw 15 million viewers in prime time.

ESPN needs to keep enough content to justify the rates, but I agree they will struggle to keep everything they have today. ESPN may be forced to abandon some of these agreements if other upstarts decide to overpay. The upshot of losing one high profile sport like NFL or NBA means they have BILLIONS to spend on something else.

 

[bladiator]

Those packages are subject to local blackouts so not really an option for people wanting to see their local team.

Exactly. Not even talking about ESPN specifically, if I want to watch our local Dallas teams (Rangers, Mavericks), I need access to cable so I can have access to Fox Sports Southwest. Without that, I have to buy a subscription to a location blocker service to be able to watch my team locally with a subscription to mlb.tv or nba.tv. Hey, if you want me to watch some crappy local commercials, I'm fine with that! Just don't black out my games.
The location blocker service ends up costing me an additional $50-100 a year and they are sometimes broken by the streaming services and then they have to fix them again and you might not have access to your games for weeks or months.

 

[lockedoutlogic]

I usually watch Pardon the Interruption evenings before the local news. Sue me.

Meanwhile nobody in my circle of friends is a religious watcher of Fox News, MSNBC, etc. But I’m not going to deny those people exist.



Yes and no. Those packages are subject to local blackouts so not really an option for people wanting to see their local team. League packages also don’t carry games broadcast nationally on networks like...ESPN.

They’re also more expensive than what a stand-alone ESPN service is likely to cost. Buying the full season of MLB and NBA season passes would cost about $350 per year or $30 per month. For two sports. An ESPN streaming product is likely to cost half of that, IMO, while providing FAR greater variety.

Before I paint myself as a card-carrying sports fanatic, I probably only watch 2-4 hours of live sports on ESPN per week. But I have a teenage son who likes University of Louisville athletics and KC Chiefs. I have a teen daughter who plays high school volleyball (NCAA VB is readily available via ESPN live or streaming) and likes the Golden State Warriors. I have a wife who likes Duke and Notre Dame.

Cord cutting is going to continue. No question of that. But let’s not pretend that the world is divided into two groups: those who have already cut the cord and those who are too naive to have discovered cord cutting yet. ESPN is typically among the top 5 most watched cable networks in cumulative monthly ratings and individual events often top nightly ratings among all cable nets.



Except for the 80-100 times per year when ESPN is the only place to watch the Yankees/Mets/Phillies/Knicks/76ers/Jets/Giants/Eagles/Syracuse/Villanova....

I concede all your points...but the market analysts...supporting me (just kidding)...kinda agree with what i said.

You seem to be a "fan" of espn...and while it's predicted to "stabilize", not a single analyst is predicting that it will ever come close to generating 40% of Disney's walk away profits again...

...which means they're out for blood...which means they'll get it at the turnstiles in Orlando. That's the bottomline for us here.

 

[lockedoutlogic]

Exactly. Not even talking about ESPN specifically, if I want to watch our local Dallas teams (Rangers, Mavericks), I need access to cable so I can have access to Fox Sports Southwest. Without that, I have to buy a subscription to a location blocker service to be able to watch my team locally with a subscription to mlb.tv or nba.tv. Hey, if you want me to watch some crappy local commercials, I'm fine with that! Just don't black out my games.
The location blocker service ends up costing me an additional $50-100 a year and they are sometimes broken by the streaming services and then they have to fix them again and you might not have access to your games for weeks or months.

If you guys go back and read what I said...I disclaimed/addressed that.

But RSNs are in a different market than espn. The local baseball channel is more like to keep a subscriber hostage to cable than espn. And the markets know it. And so do the cable companies and advertisers.

Espn provides very limited live sports outside of college...they "dabble" in baseball and football and have NBA...

And my point on streaming is its breaking down the ties to the local teams...in a generation there won't be too much of one. Kids are watching steph and Lebrun...not just in San Francisco and Cleveland. That isn't the tie that binds that it used to be.

I had 4 choices on baseball when cable first started expanding...I don't watch any of them these days...no offense to the Pirates, braves, cubs or Mets...

(Ok...the pirates are still offensive )

 

[lockedoutlogic]

That statement might not hold true for long, though. It's been reported that Amazon and Facebook will be bidding on rights to the Premier League for soccer, so it's presumed that they and Netflix will be bidding on the major US sports contracts as they come available.

Not only that...pro sports aren't the loss leaders for the major networks they were...all the companies (the big 4) with tv deals are gonna look to save/cut as ad revenue declines. Leagues won't be able to write their own contracts anymore and they will be forced to partner more with other companies who didn't have a seat at the table prior.

 

[dreiwhit]

...which means they're out for blood...which means they'll get it at the turnstiles in Orlando. That's the bottomline for us here.

Deep sigh, just because I know you are right.......

 

[Lee Matthews]

Yep...welcome to the United States, circa 1985

It's still a bit like that here in the U.K. So many people are cordcutting as we have Free to Air TV which now covered about 80-100 channels plus services like Amazon and Netflix are popular. Like the US sport, especially 'scoccer' or football as we like to call it is mainly held by Sky TV who pretty much have the monopoly. I don't even watch sports but our monthly contracts continue to rise so they can pay for the sports rights.

Other providers provide sport but it's nothing significant.

My personally I will probably stayed tied to casket which uses satalite as they do provide a good service and currently content is spread too thinly for me to cord cut

 

[tjkraz]

You seem to be a "fan" of espn...

I don't have any ESPN Zone t-shirts if that's what you're implying.

"fan" is probably a bit much. I just appreciate the variety of programming they offer. In a way, there are parallels to the entire cable industry. Sure there are streaming products dedicated to NFL, NBA, MLB, Soccer, college, etc. But buying a la carte products from each of those leagues would cost me FAR more than the sampling I get from ESPN.

...and while it's predicted to "stabilize", not a single analyst is predicting that it will ever come close to generating 40% of Disney's walk away profits again...

...which means they're out for blood...which means they'll get it at the turnstiles in Orlando. That's the bottomline for us here.

Agree, the golden age is over. And yes, Disney being Disney, they'll look to make up for ESPN's declines elsewhere.

In the short term the questions for ESPN are:

1) How much longer before the cord cutting wave crests? Everyone has a theory but we really don't know. Personally I switched from traditional cable to the DirectTV Now streaming service. My fees went down substantially--there are no equipment fees or long-term contracts and the skinnier programming package is cheaper than what I was getting. But I still have several ESPN networks, which means Disney is getting their $8 from me.

Several of my cord cutter associates have since re-subscribed because cable/sat companies responded with lower rates and/or they discovered that Netflix just wasn't enough. Cable/sat is still seeing a net loss in business, but I wonder how many people will eventually tire of Netflix or look to revisit content they've lost.

2) What impact will the ESPN streaming service have? The fee will be more than $8, meaning a single streaming customer is probably worth 1.5 - 2 cable customers. And again, the sheer volume of programming makes it an acceptable value to sports fans.

I've seen info which suggests ESPN's rates will exceed $10 per subscriber by 2020. Losing 2-4 million subscribers in a year is less than ideal. But rate increases on the remaining 87 million help offset. (Of course, programming / operational costs will escalate, too.)

ESPN is locked into the NFL for about $2B until 2021. That's the deal which really needs to be reevaluated when the time comes. The NFL is still a draw, but that's 25-30% of their total programming costs for one weekly contest over 4-5 months.

 

[hakepb]

Gotta get your foot in the door somehow. The big networks hold the rights for the majority of the games for the time being, but if Twitter and amazon prove they can broadcast the product effectively, they might make themselves a serious contender next contract time

It’s an interesting dynamic.
Fox became one of the “big 4 networks” because NFL games added enough eyes to their traditional shows...and their NFL contract is essentially a loss leader (usually breaks even)

But nobody really cares about how much Fox is paying because they are an OTA station that gets revenue from TV ads and not subscribers.

If Amazon or Netflix pay too much for content and have to raise subscription costs .. they will likely suffer the same problem as ESPN.

 

[tjkraz]

But nobody really cares about how much Fox is paying because they are an OTA station that gets revenue from TV ads and not subscribers.

That's not entirely true.

The Fox network (and ABC, NBC, etc.) has revenue streams primarily from advertising and affiliate fees paid by the local channels.

The local affiliates earn ad revenue, but they also charge carriage fees to the cable and satellite providers. Whenever you see those alerts that "DirecTV customers may soon lose access to [network] programming", it's because the local channel and DirecTV (or any other provider) are at odds over the monthly subscriber fees.

As for many networks using the loss leader model on sports, that is quite true. Back in the 90s, NBC famously allowed most of their sports contracts to lapse. There was a time when they had pieces of all of the major sports: NFL on Sunday afternoons, NBA during Jordan's heyday and even MLB with Bob Costas as the primary voice. NBC failed to renew all of those deals, opting instead to pursue things like Olympic coverage and lower-profile sports which could be carried at a profit.