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Unsportsmanlike conduct at the Worldwide Leader: ESPN cuts hundreds while boosting profits

Here’s a riddle for our modern media times: When does a company making significant profits while pouring money and resources into competing with a host of new rivals, actually turn around and erase up to 400 positions without notice?

When it’s Disney-owned ESPN.

Word about the layoffs began percolating through sports media Tuesday, sparked by a report on Deadspin and fueled by a typically vague statement from the Worldwide Leader in Sports: “We are implementing changes across the company to enhance our continued growth while smartly managing costs. While difficult, we are confident that it will make us more competitive, innovative and productive.”

As a number of experts immediately pointed out, ESPN doesn’t seem like a company close to layoff mode. At its upfront presentation to advertisers a week ago, it unveiled plans for a new, massive 193,000 square-foot studio at its Bristol, Conn, headquarters (including a new set for its signature SportsCenter show), costing $125 million.

Its 11-year agreement yanking rights for the U.S. Open tennis tournament from longtime host CBS was valued at $825 million alone; the latest among many high-priced deals aimed at keeping major events away from rival sports channels owned by CBS, NBC and Fox. There’s a new football show coming and its first daily soccer show, both in August.

This all comes a few weeks after ESPN’s parent company, Disney, reported a 32 percent rise in profits that beat analysts predictions. So ESPN’s 7,000 employees (4,000 in the U.S.) can be forgiven for bristling under a contradictory message: “We’re making money, we’ve got serious competition coming, we’re pouring resources into facilities and programming, and you’re fired.”

This seems an unexpected collision between unyielding corporate edicts, skyrocketing competition and the brutal reality of modern television.

Rumors swirl that Disney is insisting on cuts across all its properties to maintain its stock performance and ESPN’s spending on sports rights has gotten the blame for making job cuts necessary.

It’s simple industry math: sports is the form of television most resistant to the forces dismantling big audiences elsewhere. Fans want to see it live, which reduces use of DVRs, keeping viewers from fast-forwarding through commercials. And it’s the last big meeting place for viewers of all stripes, still setting audience records at a time when TV networks are losing 10 percent of their audience every year.

Which leaves staff positions as the best place to make cuts, especially if the company can use the instability to trade experienced, higher-salaried employees for younger, less-expensive ones. And if the jobs on the line are mostly held by folks who don’t appear on camera, fans may not notice anything. At least, not at first.

The good news for those caught in the layoff matrix, is that there’s a host of competitors, including the soon-to-debut Fox Sports 1 channel, who would likely love to hire knowledgeable ex-ESPN employees to ready for competition with the Worldwide Leader.

Just as ESPN needs to be focusing on combat with Fox, its dealing with the distraction and bad press of layoffs in the midst of relatively good times. And even some local officials have groused over millions handed to ESPN in state and local tax breaks for guaranteed job growth, though reps for the company insist they’ll meet those employment targets.

The bad news: The point has been made loud and clear to employees. It doesn’t necessarily matter how much money the company is making or how great the approaching challenge, if there’s a way to polish the stock price by shedding a few more jobs, you might be out the door.

For a company dedicated to covering all aspects of sports, that seems an awfully unsportsmanlike way to do business.  

Eric Deggans is TV and Media Critic for the Tampa Bay (Fla.) Times and a 1990 graduate of the Indiana University School of Journalism. He also provides regular commentary for National Public Radio and has been published by the Washington Post, Chicago Tribune, Detroit Free Press, Chicago Sun-Times and many other publications. He also writes a blog on media, The Feed.

Check out Deggans’ latest book, Race-Baiter, How the Media Wields Dangerous Words to Divide a Nation, and you can also visit his website for more information.

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