ESPN has been having a tough time figuring out what it wants to be. Having injected leftwing politics and political correctness into its lineup, many sports fans on both sides of the political aisle were disgusted. ESPN’s ratings declined and suffered some self-inflicted bleeding over, among other things, the NFL kneeling controversy.
Attempting to stem the bleeding, ESPN brought in a new president and slashed jobs and salaries. But ESPN lost an additional two million subscribers in 2018; this brings their total loss of subscribers to almost 12 million since 2013 and 15 million since 2011.
ESPN lost 2 million subscribers in the past 12 months, according to an annual earning report released by Disney, the sports network’s parent company.
. . . . Subscriptions account for more than 60 percent of ESPN’s revenue.
Overall, ESPN is responsible for almost 30 percent of Disney’s value, according to a 2017 Forbes report. Overall, according to the financial magazine, ESPN has lost nearly 12 million subscribers since the end of 2013, dropping from approximately 98 million to 86 million.
Much of the subscription loss is due to the national cord-cutting trend, but even with that in the mix, ESPN’s losses are further complicated by its heavy (and necessary) investment in sports rights.
The 15 million subscribers ESPN has lost over past seven years represent $1.44 billion in yearly lost revenue company will never book. Those revenue projections helped fuel the bids ESPN made for the NBA, NFL, CFB playoff, & more. That's a big problem. https://t.co/ADKbU2uXb1
— Clay Travis (@ClayTravis) November 23, 2018
Outkick the Coverage‘s Clay Travis reports:
Now every cable and satellite channel is losing subscribers . . . but the impact disproportionately impacts ESPN for two reasons: 1. the network makes far more in revenue off the cable bundle than any other channel so it stands to lose, by far, the most off the collapsing business model and 2. the network has guaranteed tens of billions in sports rights fee payments over the next decade and more to sports leagues.
Where does that money in guaranteed payments come from?
You and me who are paying our cable and satellite bills.
So unlike, for instance, CNN, which can simply cut back on costs for programming in the event revenues aren’t meeting projections, ESPN purchased much of its sports rights years ago before the full impact of cord cutting had become apparent to their executives. (The Wall Street Journal referred to these ESPN executives, who denied the impact of cord cutting, as “flat earthers” in a recent article).
The article continues with some interesting information about ESPN’s deals with the NBA, NFL/Monday Night Football, and etc., so check it out if you are interested.
Here's the big question ESPN faces, how does it avoid dying? Going political has finally been rejected as a disaster, ESPN+ isn't the answer either. How does the company survive as cord cutting slowly strangles it to death? https://t.co/ADKbU2uXb1
— Clay Travis (@ClayTravis) November 23, 2018
Travis does posit an interesting take on ESPN’s leftward lunge into politics: the sports network “went so aggressively left wing political” out of “desperation, a cry for relevance in a media market where that relevance was rapidly collapsing.”
For over a generation ESPN had the best business in media history as it built up 100 million cable and satellite subscribers, but now that business is rapidly unraveling, we are going to watch the collapse of ESPN over this current generation.
Remember, ESPN owes almost all of its audience to its purchase of sports rights. What is the company left with absent those sports rights?
. . . . This business challenge, by the way, is why I believe ESPN went so aggressively left wing political. It was desperation, a cry for relevance in a media market where that relevance was rapidly collapsing. I think ESPN executives put pressure on TV execs to increase ratings and the gambit was, let’s go political.
That, clearly, was a disaster that instead of rescuing the company actually accelerated ESPN’s own obsolescence.
To his credit ESPN president Jimmy Pitaro, at the direction of Bob Iger, has repudiated that programming decision and it has led to the departure of Jemele Hill, Kate Fagan, and other left wingers at the network. Now I think ESPN is hunkering down and focusing everything they have on sports.
This was reflected, interestingly, earlier this week when Fagan said she was leaving ESPN because she no longer believed ESPN had an interest in covering the intersection of LGBT and sports in the way she hoped they might. It’s a sign of how lost ESPN’s priorities had become that they were covering the intersection of sports and anything. How about instead of worrying about covering things that intersect with sports, you just cover sports?
Pitaro and Iger’s new idea, which I think is probably a smart one, is the best way to forestall your decline is to go hard after your base — ESPN is promoting those who love sports the most and kicking politics to the curb. It’s the strategy, honestly, they should have gone to four years ago.
ESPN’s streaming service ESPN+ was launched earlier this year, and in its first five months boasted one million paid subscribers, but as Travis notes, “Even assuming all of those million subscribers are paying $4.99 every month that’s just $60 million a year in revenue, or about what ESPN pays to air one single half of Monday Night Football on ESPN this year.”DONATE
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