ESPN layoffs - what enterprises can learn from ESPN's digital adversity

Profile picture for user jreed By Jon Reed April 30, 2017
ESPN's latest round of layoffs sent shock waves through the sports media industry as some big names were let go. The blame game for the cause of these layoffs continues. The reasons for ESPN's troubles run deeper, and point to digital fault lines that we'd best be aware of.

Sports media empire ESPN is a classic American startup story. ESPN is also a lightning rod for criticism about the declining state of sports journalism.

Though it's been decades since ESPN was swallowed up by parent company Disney when Disney purchased ABC in 1995, ESPN managed to keep its headquarters where it all began, in charmless Bristol, Connecticut.

ESPN hasn't tasted iron fist adversity in a long time. But this latest round of layoffs, which includes prominent NFL, NHL, and MLB reporters, has caught the industry's attention.

It's also led to the blame game as critics delight in ESPN's woes. Those critics span rival networks and axe grinders who claim ESPN is getting a karmic slap for a supposedly liberal political agenda. Add to the detractors embittered fan bases, including hockey fans, who hated ESPN's downplay of hockey once it lost the NHL broadcast rights, and New England Patriots fans - of which I am one - who think ESPN did a lousy job reporting on the so-called "deflategate" scandal, including poorly-sourced social media bullshit "reports" now proven erroneous.

The ascendancy of the "cable bundle"

But while I shed no tears for ESPN, I did not delight in these layoffs. They are an omen of hard times for old school sports journalists - one more sign that media is being disrupted in ways that favor vacant, attention-grabbing hot takes over serious analysis.

Diginomica, however, is an enterprise beat, so I'm not going to take you down that path. My interest here is in unraveling the reasons for these layoffs. If ESPN can stumble, we sure as hell can too.

I'm told that ESPN's true golden years were the underground years, in makeshift studios, with flamboyant/witty anchors not too far from The Anchorman's seventies chic. But ESPN's commercial ascendance was all about the rise of the cable networks, with ESPN bundled into lucrative subscriber packages, eventually, in most cases, in the "basic cable" package that most cable households would have.

Along with the rise of ESPN's visibility came the rise of Sportscenter, ESPN's flagship program. Though several anchors drove Sportscenter's rise, it was the chemistry between Dan Patrick and Keith Olbermann (aka The Big Show), which came to define a banter-heavy, personality-driven event that turned sports highlight reels into must-watch. Add in ESPN's hold on broadcasting contracts, from college football to the NFL, and you had enough exclusivity to compel viewer demand.

Digital cracks in the model

Those who think ESPN's woes began with cord-cutting are wrong. ESPN's problems began with the rise of YouTube and the social mediazation of sports highlights. ESPN used to be one of only a handful of places you could go for daily highlights - and get them in style.

Disney made its play in 1995, and the good times continued, peaking when ESPN scored Monday Night Football in a 2005 megadeal with ABC and the NFL - perhaps the biggest sports broadcasting coup for a cable network. But the cracks of digital disruption were emerging. As highlights proliferated online, SportsCenter wasn't quite the must-watch anymore. Big personalities like Olbermann and Patrick left. ESPN countered that "Sportscenter is bigger than any one person," but that was only true to a point.

ESPN wised up to the highlight reel problem, and began shifting gears to more "analysis." The rise of Pardon the Interruption (PTI) indicated there could be a future in TV sports opining. PTI's success was thanks in no small part to the acidic banter between friends and intellectual sparring partners Michael Wilbon and Tony Kornheiser. But PTI, for all its countdown gimmicks and verbal smackdowns, was jockeyed by two working journalists, who still wrote for the Washington Post when the program debuted.

The ascendancy of the hot take

The launch of a small, bizarre show out of ESPN's New York studio, with the godawful name "Cold Pizza" was the beginning of something different. That ESPN2 show would evolve into First Take, with Skip Bayless annihilating his journalistic roots (which some had already questioned), in a full morph to contrarian blowhardism, perfectly suited for whipping fans into a froth and creating social media faux outrage flaps that ESPN could capitalize on, in the name of "digital engagement."

Industry critics call this the Embrace Debate era of sports media. Forget about shedding light on vital issues. Who can create the most attention-grabbing stance, regardless of its rigor or consistency with yesterday's hot take? In the Embrace Debate era, unexplained, dramatic shifts in opinion, absurd predictions and baseless speculations are welcome.

Embrace Debate is the backdrop to these layoffs. No one at ESPN who resembles a pontificator of this type was laid off, or asked to take a pay cut. Skip Bayless was offered a reported $4 million per year prior to his departure to Fox Sports. Stephen A Smith, his bloviating former co-host, carries on with First Take to the tune of $3.5 million per year. (Smith didn't appreciate being the lightning rod for layoff comparisons).

Digital forces a reckoning

But if business is good for social media puppeteers, it's not all good, and that's where broadcasting contracts and cord cutting come in. These layoffs indicate that ESPN now sits on a digital fault line:

My take

ESPN is in slow cook trouble. Cable subscribers are gradually falling off, though not yet in massive droves. Rabid sports fans aren't going anywhere; most of those will pay for the rights one way or the other. It's the casual viewer that will fall off first, trying Netflix/Hulu/Amazon, and then either bailing on cable or opting for the sports-free packages more and more cable/satellite providers offer.

Fans are willing to pay for live sports events if they can get them on their device of choice. However, just like the music industry has never been the same since the digital proliferation of the mp3, sports networks have not been the same since the social media highlight reel.

That genie is well out of the bottle, creating an identity crisis that ESPN has struggled to answer. The end result is a new level of economic insecurity, and more questions about the future of journalism as a profession. In the big scheme of things, these layoffs weren't really much of a cost trim; some have speculated this was more of a cosmetic show of discipline for Disney shareholders.

Drawing comfort from tangible assets, whether it's taxi fleets or hotel chains or exclusive broadcasting contracts, is a dangerous habit as digital creates new competitive openings, and mobile changes consumer habits. The overhead of those assets can even become an impediment - especially if they are obtained without discounting for digital shifts. If ESPN has a strength to draw on now, it's the presence of creative leaders who are used to bold experiments.

Those startup culture roots will be important now. It's hard to imagine ESPN surviving in the long run without the same kind of painful re-inventions once-untouchable media institutions like the New York Times and The Boston Globe have been grappling with.