If Sports Have Never Been More Popular, Why Is ESPN Laying Off So Many People?

Senior Contributor
04.26.17 25 Comments

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This morning, ESPN announced layoffs were coming, and it appears that people will be getting released throughout the day. Paradoxically, though, this comes right as interest in sports has never been higher. The problem isn’t that nobody wants sports; it’s that how ESPN, and televised sports in general, serve up sports is out of sync with how people want to consume them.

ESPN, at root, makes money from retransmission fees, which is what a network charges a cable company, per user, to carry that network. Thanks to how cable works, you have to buy a bundle of channels and don’t get any choice as to what’s in that bundle. And as of 2014, ESPN got $6 per subscriber from every cable company, whether they were a rabid sports fan or just flipped past ESPN on their way to Food Network. ESPN could charge that both because televised sports were seen as a must-have, especially in the war against streaming services, and because ESPN splashed out on deals with all the major leagues (bar the NHL), the NCAA, and other big ticket sports properties. Sports were supposed to be appointment television that people would hang onto their cable subscriptions for.

And cable desperately needed appointment television. Cable bills rise, on average, 5% a year, which cable providers have kept hidden by charging fees instead of upping the overall subscription costs. The problem, of course, was that as bills rose, ESPN demanded more money, which caused bills to rise. Viewer wallets couldn’t sustain this spiral forever.

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