ESPN cuts 300 jobs as subscriber fee growth slows
ESPN President John Skipper told staff Wednesday that the Disney-owned sports network will be eliminating jobs as part of “a number of organizational changes” at the company.
“We carefully considered and deliberated alternatives before making each decision,” Skipper said in an internal message released to the media. “The people who will be leaving us have been part of ESPN’s success, and they have our respect and appreciation for their contributions.”
According to an ESPN spokesperson, about 300 positions will be eliminated, which is close to 4% of the company’s 8,000 workforce worldwide. There are no plans to cancel any programs or make any changes in on-air talent.
While the cuts will be across all units of ESPN, the company is expected to continue to invest in technology to meet the demand of online and mobile viewing.
In his message to employees, Skipper said the job cuts are “part of a broad strategy to ensure we’re in position to make the most of opportunities to build the future of ESPN.” He also cited a need for “integrating emerging technology into all aspects of our business.”
While still a highly profitable unit of Disney, ESPN has been under pressure to control costs as it no longer can depend on steady growth from its most reliable revenue stream: fees from cable and satellite subscribers.
ESPN commands the highest per-subscriber fees in the industry, thanks to its array of live events that include the National Basketball Association, National Football League’s Monday night games, Major League Baseball, World Cup soccer, U.S. Open Tennis and the Masters tournament. But a growing number of homes are doing without video-subscription services as more programming can be accessed through broadband Internet.
According to Nielsen figures for August 2015, ESPN had 92.5 million subscribers, down from 97.7 million in August 2013. Disney execs recently lowered its growth projections for operating income for its cable TV business.
But sports — the core of ESPN’s programming — continues to be the most powerful platform for advertisers looking for viewers who watch TV live and not delayed on DVRs or other devices. The trend is likely to drive up the cost of sports-rights fees.
In its new deal to carry NBA games, ESPN’s fee nearly tripled to $1.4 billion per year.
As Skipper put in his memo, “The demand for sports remains undiminished, though the landscape we operate in has never been more complex.”
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