If ESPN were one of the teams ESPN covers, it might describe itself as an organization “in transition,” which is a dainty sports cliche that means the immediate future isn’t as promising as the recent past.
One reason for pessimism: The “Worldwide Leader in Sports” has seen a steady drain of superstar talent over the past 10 months, an exodus that is occurring amid deeper structural changes that are eroding ESPN’s once-unassailable fortress.
On Tuesday, the network lost Skip Bayless, a fulminating, at-times infuriating commentator who has been a star at the network for 12 years, most recently on a daytime chatfest called “First Take” that airs on ESPN2. Bayless and ESPN announced that he is leaving the network, but neither said where he is going. The betting is that he’s planning to join Fox-owned FS1, ESPN’s up-and-coming but still-distant rival, reportedly with an eye-popping contract in excess of $5 million.
Bayless’s departure came just two days after ESPN lost Mike Tirico, the veteran play-by-play announcer who was the voice of “Monday Night Football,” ESPN’s signature franchise. Tirico will join NBC, where he is the heir apparent to Al Michaels on “Sunday Night Football” and to Bob Costas as the studio host of the network’s Olympics broadcasts.
If this were the New York Yankees — and ESPN is to sports broadcasting what the Yankees are to baseball — fans would wonder if this dynasty was in trouble.
People at the Disney-owned company caution against declaring any trends. They say the circumstances surrounding each of the recent departees varies. On one hand, ESPN was outbid by rivals for Bayless, Tirico and Cowherd; on the other, it chose to walk away from Olbermann, Whitlock and Simmons, whose programs were either poorly rated (Olbermann) or with whom ESPN’s management clashed (Simmons and Whitlock). In yet another variation on the theme, ESPN commentator Curt Schilling, a former major league pitcher, was fired last week for a series of offensive social-media posts.
“Over the past 12 months alone, we have signed or re-signed nearly 200 of the more than 1,000 . . . commentators ESPN employs,” ESPN spokesman Josh Krulewitz said in an email. “The notion that ‘everyone is leaving’ is a superficial narrative. Change is inevitable, and strengthened by our unmatched depth, we continue to navigate it very well.”
Yet ESPN’s problems go deeper than the loss of a few hosts and talking heads. After years of raking in gargantuan profits, its lucrative empire is threatened by upheaval in the media and technology businesses.
The most obvious disruption is cord-cutting, the movement of TV viewers away from cable subscriptions, most notably to Internet streaming services such as Netflix and Hulu. ESPN, founded in 1979, has been disproportionately affected by the trend; last fall, it surprised the TV industry by revealing that it has lost 7 million subscribers over the past two years, a sizable chunk of its base of nearly 100 million.
A second whammy is coming from within the cable industry itself. Cable operators have long fumed that ESPN and its multiple clone channels are the most expensive for them to license, a cost that is passed along to subscribers in the form of ever-rising monthly cable bills. They have responded by offering lower-priced tiers of channels — known as “skinny bundles” — that usually don’t include the ESPN suite of networks. This has become an attractive option for some viewers, who don’t want to pay for channels they don’t watch.
While ESPN still has the rights to NFL, NBA, Major League Baseball and college football games, all of the cord-cutting and skinny-bundling has cut into the revenue streams that have long showered ESPN with money.
It has responded by cutting costs. In October, it announced the layoffs of about 300 employees, or about 4 percent of its staff. A few days later, it shuttered Grantland, a literary sports and pop culture website founded by Simmons.
Holding down costs is also why ESPN has drawn the line in bidding to keep its personalities.
In an earlier, richer age, ESPN’s executives simply would have taken out their checkbook to renew the contracts of such personalities as Cowherd, Bayless and Tirico, said John Ourand, who covers the company for SportsBusiness Daily. “If they were a million dollars off on a talent they wanted, I imagine they just bridged that gap” with more money, he said.
But that was then.
Only a few years ago, ESPN’s president, John Skipper, resembled George Steinbrenner, the Yankees’ free-spending former owner, said James Andrew Miller, the co-author of “Those Guys Have All the Fun: Inside the World of ESPN,” a best-selling history of the network.
“He spent a lot of money on people and on product,” Miller said. “He went for longer deals, more expensive deals. But that’s before one of the central equations in ESPN’s financial landscape changed” — namely the big drop in subscribers.
The bottom line now, he said, is that “ESPN has decided that its four initials are more valuable than any particular piece of talent.”