ESPN Is a Dying Behemoth
Disney’s ESPN is in for a world of hurt in the coming years, and it’s not entirely clear how they can avoid the red. Still profitable, the network is nonetheless stuck, with shrinking revenue and a hostile outlook. While those who follow sports media have noticed a leftward shift in the sports network’s coverage, especially since the George Floyd summer in 2020, the primary reason for the network’s crunch appears to be the rapidly dwindling number of cable subscribers combined with expensive long-term obligations to major sports leagues that cannot be easily amended or withdrawn from. (Read More: Winning Time: Fun Yet Controversial Tale of Basketball’s Golden Age)
Kevin Draper and Brooks Barnes report for the New York Times:
According to Disney’s financial filings, it will pay $10.8 billion this year for sports programming. It has future commitments totaling about $57 billion, with some of its contracts running well into the 2030s. These contracts are a result of a spending spree the company has undertaken to head off deeper-pocketed tech companies, which are also hungry for sports programming, and to stock its nascent ESPN+ streaming service.
While another streamer, Netflix, has similarly struggled with finances of late — following years of success and a ubiquitous presence in streaming that only recently suffered peer competition — what benefits the streaming group is that even a fairly large outlay for a movie or series is resolved in a matter of a few years, at most. Planning and paying for NFL or NBA rights a decade in advance reduces ESPN’s ability to respond to changing consumer expectations. With blocks of the budget spoken for, the easiest way to stay solvent in troubled times has been to cut manpower, starting with technicians and moving on to some of the biggest names and salaries:
To pay for the rights, ESPN has cut back in other areas — primarily original programming — and relied more heavily on a handful of its most famous personalities, like Stephen A. Smith. Once justifiably proud of never having undergone layoffs, the company has seen six waves of layoffs since 2015, including one that affected a number of high-profile executives and on-air personalities in June.
ESPN enjoyed an easy existence as a quasi-sports utility, the sole provider of any and every broadcast under the sun. What competition there was didn’t have the pockets or presence, so NBC Sports and Fox Sports had to make do with peripheral sporting events like the Olympics and soccer. But that was cable. In the streaming sphere, there are tech giants like YouTube (which has secured NFL RedZone), Apple TV+ (Major League Baseball), and Amazon (Thursday Night Football). The second ESPN turns from cable and puts to sea aboard its ESPN+ app or another, more polished app, the network will have to abandon an unviable monopoly. But leave land ESPN must, because cable cannot support the promises ESPN made and will have to make to stay relevant.
It Ain’t Over …
But all is not lost. To turn a profit in media is remarkable, and ESPN is spending big on bringing outside talent with large audiences in. For instance, Pat McAfee, a former Indianapolis Colts punter and now a video podcast host, helms the foremost show for current players to come on and break news. Throughout the past year, Aaron Rodgers used the friendly jocular (unskeptical) Pat McAfee Show to update the world on his intentions — would Green Bay’s quarterback retire? Quit? Demand a trade? Tune in for Rodgers to tell you nothing and share ancient Sumerian medicinal secrets. But the show has an edge and an audience that ESPN couldn’t build in-house, so they agreed to pay McAfee $85 million over five years for his show. ESPN gets an edgy newsmaker to keep at arms-length who will explore American appetite for new sports media, and McAfee is legitimized as a sports commentator and kingmaker. It could work; it could be a colossal mistake that burns money the network doesn’t have. (Read More: Classic Cars: Driving the American Dream)
The second possible opportunity for ESPN is the weakening appetite for streaming investments. Disney, Netflix, Discovery/HBO, and NBC are all coming to realize that streaming is a loser — customers are fickle, shows aren’t guaranteed to get even a minimal amount of eyeballs, and competition for established winners is so fierce that it’s nearly impossible to fill a menu with stuff most viewers want to watch. This can mean two things: Either other media giants will pay that much more for sports programming, as it’s one of only a few items guaranteed to land viewers — or quite the opposite, where deep cuts and hesitance to be tied to multiyear deals means few will consider making any overtures to the leagues.
ESPN’s future is in the hands of organizations other than itself. It may well survive, but I can’t say it deserves to. The company’s hesitance to change, its nauseating social signaling, and its inability to develop talent show it to be in decline. But as they say, “It ain’t over until the body-positive individual sings.”
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