ESPN Layoffs

[oldwarrior81]

They could double down on dramas like Playmakers.   The NFL seemed to have a problem with the storylines, but that was over a decade ago.

A great storyline from episode 2:
The league drug-testing official visits the Cougars in the second episode of Playmakers, and DH finds out that he's on the list. Offensive lineman "Guard Dog" Fredericks tempts Leon with a way to get his mojo back. Olczyk continues to struggle with the ramifications of the devastating hit he made. Speaking of pain, quarterback Derek McConnell sucks down anti-inflammatories like candy. The team doctor is concerned about McConnell's health. It's all part of the effort to keep personal problems from interfering with the game. Guard Dog gets caught and DH goes through a terrible procedure, involving injecting clean urine into his own bladder, to not get caught.
A man is shot outside a club, forcing DH to decide where his loyalties lie—with the team or with his posse.

[mu03eng]

They could double down on dramas like Playmakers.   The NFL seemed to have a problem with the storylines, but that was over a decade ago.

A great storyline from episode 2:
The league drug-testing official visits the Cougars in the second episode of Playmakers, and DH finds out that he's on the list. Offensive lineman "Guard Dog" Fredericks tempts Leon with a way to get his mojo back. Olczyk continues to struggle with the ramifications of the devastating hit he made. Speaking of pain, quarterback Derek McConnell sucks down anti-inflammatories like candy. The team doctor is concerned about McConnell's health. It's all part of the effort to keep personal problems from interfering with the game. Guard Dog gets caught and DH goes through a terrible procedure, involving injecting clean urine into his own bladder, to not get caught.
A man is shot outside a club, forcing DH to decide where his loyalties lie—with the team or with his posse.

You think the NFL hated those story lines 15 years ago.....could you imagine if ESPN tried to put that out now? Holy crap, they would folder faster than a tent at the Fyre Festival.

[Herman Cain]

And if we see more of the bolded part above, wouldn't we also see an acceleration of cord cutting?

As noted here many times, ESPN is the most expensive channel on cable (ESPN2 is the third most expensive).  So, one would expect the best programming from the most expensive channels.  If they bail on considering Thursday Night Football, and presumably more behavior like this, such as Monday Night Football, NBA, CBB etc. (after their current contracts expire), why wouldn't we see a wholesale cord-cutting flight from ESPN?

The point that was being made was they view Monday night Football as a premium asset .  They did not view Thursday night in the same light. 

[jesmu84]

You think the NFL hated those story lines 15 years ago.....could you imagine if ESPN tried to put that out now? Holy crap, they would folder faster than a tent at the Fyre Festival.

The plot hits a little too close to home, me thinks

[warriorchick]

Clearly they have internal production capacity and could create sports soap operas of  some sort. 

That already exists - it's called the WWE.

[Jockey]

As noted here many times, ESPN is the most expensive channel on cable (ESPN2 is the third most expensive).  So, one would expect the best programming from the most expensive channels. 

No, one would expect the best in live sports.

[mu-rara]

Back in the day, we didn't need cable. Our late night programming was back to back M*A*S*H episodes, followed by The Odd Couple, Hawaii 5-0, Twilight Zone, and the Rat Patrol. All brought to you by Ernie Von Schledorn. Phil Tolkan and his singing Pontiacs, and Suburpia.

Those were the days my friend.

[mu03eng]

No, one would expect the best in live sports.

[mu-rara]

Alternative facts right there. Please tell us you didn't graduate from MU and really believe that.

Tim Tebow will do very well in life no matter what you say.

[Jockey]

Tim Tebow will do very well in life no matter what you say.

I don't remember anyone saying differently.

I (and others) have repeatedly said that he will do very badly in professional sports.

[Billy Hoyle]

They could double down on dramas like Playmakers.   The NFL seemed to have a problem with the storylines, but that was over a decade ago.

A great storyline from episode 2:
The league drug-testing official visits the Cougars in the second episode of Playmakers, and DH finds out that he's on the list. Offensive lineman "Guard Dog" Fredericks tempts Leon with a way to get his mojo back. Olczyk continues to struggle with the ramifications of the devastating hit he made. Speaking of pain, quarterback Derek McConnell sucks down anti-inflammatories like candy. The team doctor is concerned about McConnell's health. It's all part of the effort to keep personal problems from interfering with the game. Guard Dog gets caught and DH goes through a terrible procedure, involving injecting clean urine into his own bladder, to not get caught.
A man is shot outside a club, forcing DH to decide where his loyalties lie—with the team or with his posse.

LOVED that show.

[Billy Hoyle]

interesting article about the direction ESPN is headed.  Time to catch up with evolving viewing habits:

https://finance.yahoo.com/news/espn-will-look-dramatically-different-1-year-130050254.html?soc_src=social-sh&soc_trk=fb

[Tugg Speedman]

interesting article about the direction ESPN is headed.  Time to catch up with evolving viewing habits:

https://finance.yahoo.com/news/espn-will-look-dramatically-different-1-year-130050254.html?soc_src=social-sh&soc_trk=fb

It's one thing to say taste and preferences in consuming sports programming are changing.  It is quite another thing for ESPN to actually adapt.

[Tugg Speedman]

So your solution to fix ESPN is to have them take on a third very expensive content development model (first being live sports production, second being sports commentary production) in a market space (Peak TV) that is already very fragmented and saturated?

It also assumes that ESPN has the appetite and strength of courage to produce good scripted TV that may offend their content providers and if Ballers taught us anything that absolutely do not have that ability. Propaganda for the sports leagues will not be well received.

Two things about ESPN's business model (both brown bolded) ...

Would You Cut the Cord on ESPN to Save $8 a Month? Here's How Many People Said Yes
This could be very bad news for Walt Disney.
Daniel B. Kline (TMFDankline) Apr 15, 2017 at 9:00AM

https://www.fool.com/investing/2017/04/15/would-you-cut-the-cord-on-espn-to-save-8-a-month-h.aspx

In the survey, Greenfield asked two questions:

1. "If you could save $8 per month by removing ESPN and ESPN2 from your cable or satellite package, would you do it?"
2. "If ESPN and ESPN2 were only available as a standalone service like Netflix, would you pay $20 per month to subscribe?"

More than half of respondents, 56%, said they would be willing to not have the ESPN channels if they could shave $8 a month off their cable bill. Only 6% of those surveyed said they would be willing to pay $20 a month for a standalone ESPN service.

If ESPN were to launch a streaming service, not tied to a traditional pay-TV subscription, it would trigger clauses in many of its contracts that force cable companies to provide it to a certain (large) percentage of their customers. If pay-TV providers could offer ESPN-free packages, most would, and ESPN would probably not be able to make up that revenue with a streaming service.

"If 15% paid for an ESPN/ESPN2 DTC offering at $20/month, that yields $4.1 billion in revenue, dramatically below the nearly $9 billion the two channels generate from the legacy MVPD ecosystem," Greenfiled wrote. "To make matters worse, as we mentioned above, these DTC subscribers could churn on/off whenever they want (i.e., NFL fans only would have to subscribe for football season). In turn, the actual revenue from a DTC model would be significantly lower than $4 billion."

So ESPN had (repeat had) an unbelievable business model.  About half their $9 to $10 billion/year is from customers that don't want it and don't use it.  No other business can make this claim, that 50% of their business comes from people that don't use their product.  Hey, Rocket, you're a dentist (correct?) how much do you make a year from people that sign up for office visits, pay for that visit and then don't actually show up and use your service?  I'm guessing that number is very close to zero.  For ESPN it is 50%.

Now technology and other pressures are giving those that don't want or need ESPN's service ways to opt out.  Above I noted that saying things are changing and actually changing are two very different things.  That brings me to the second facts above ...

If ESPN were to launch a streaming service, not tied to a traditional pay-TV subscription, it would trigger clauses in many of its contracts that force cable companies to provide it to a certain (large) percentage of their customers. If pay-TV providers could offer ESPN-free packages, most would, and ESPN would probably not be able to make up that revenue with a streaming service

ESPN knew they had monopoly power and FORCED cable companies to put them on basic for $7/month or they would not get it at all.  The cable companies fought back getting clauses in their contract that if WatchESPN became a stand-alone business, they could take it off basic.

What this means is if ESPN does change to the new realities of watching TV and offer WatchESPN as a stand alone, cable companies will take it off basic.  They would lower their cable bill by $7/month (or $8 or $9 is they have ESPN2, ESPNU and/ESPNNews on basic) and then immediately offer an "ESPN Premium package."  For everyone here that is a big sports consumer we just add that premium package back for the same amount our basic bill was reduced and nothing changes.  But for the roughly 50% that do not want or use ESPN, it gives them a way to ditch the most expensive station and save about $100/year.  This would devastate ESPN.

So what can ESPN do?  They can create programming for the 50% that do not want or use their product.  That is original programming like scripted dramas and/or documentaries.

If this is too expensive they can slowly bleed out over the next several years.  Because they cannot offer a streaming service to compete with the cable companies that are forced to keep them on basic.  And if ESPN allows cable companies to offer them as a premium service to the lower their basic bill, ESPN's revenues collapses.

Not a good place to be.

Oh, they can also slash and burn their broadcasting rights and put that right back onto the leagues and conferences.  That would squeeze them resulting is work stoppages by pro-athletes not willing to take less, and see schools with high athletic costs get squeezed as they get less from their conference TV packages.

This is not a good place to be if you rely on ESPN for your revenues (hello ACC, hello NFL).

[TAMU, Knower of Ball]

So what can ESPN do?  They can create programming for the 50% that do not want or use their product.  That is original programming like scripted dramas and/or documentaries.

What makes you think the 50% of people who don't watch ESPN would want to watch sports themed scripted dramas or documentaries? My guess is that most of that 50% are not sports fans so they likely will not tune into anything ESPN is doing. And they would probably piss off the 50% of people who do watch them. The documentaries maybe but scripted dramas?

[Tugg Speedman]

What makes you think the 50% of people who don't watch ESPN would want to watch sports themed scripted dramas or documentaries? My guess is that most of that 50% are not sports fans so they likely will not tune into anything ESPN is doing. And they would probably piss off the 50% of people who do watch them. The documentaries maybe but scripted dramas?

Then ESPN is doomed (over time).  They get 50% of their revenues from people that do not want the product but are forced to take it as explained above.  As they people get more options (streaming or skinny bundles) they will elect to not give ESPN any more money.  ESPN could dramatically cut their fees but that has the same effect.

Yes ESPN is still profitable and if current trends hold, that should stay profitable for a few more years.  But the trends are against them.  They are on the road to "bleeding out" and they need to do something.

Again ESPN's "big mistake" was not understanding that 50% of their revenues was coming from people that do not want their product and ESPN truly believed they were "stuck" paying them forever so they went out and committed revenues from customers that do not want their product int he form of $8 billion in broadcasting fees per year.  Now these "stuck" ESPN customers are finding ways to cut-out ESPN and ESPN appears unable or incapable of doing anything to try and keep this 50%.

[Herman Cain]

Then ESPN is doomed (over time).  They get 50% of their revenues from people that do not want the product but are forced to take it as explained above.  As they people get more options (streaming or skinny bundles) they will elect to not give ESPN any more money.  ESPN could dramatically cut their fees but that has the same effect.

Yes ESPN is still profitable and if current trends hold, that should stay profitable for a few more years.  But the trends are against them.  They are on the road to "bleeding out" and they need to do something.

Again ESPN's "big mistake" was not understanding that 50% of their revenues was coming from people that do not want their product and ESPN truly believed they were "stuck" paying them forever so they went out and committed to $8 billion in broadcasting fees per year.  Now these "stuck" customers are finding ways to cut-out ESPN and ESPN appears unable or incapable of doing anything to try and keep this 50%.

Your over analyzing the situation. ESPN is the premier cable network. It will just be a little less profitable. Apple is in discussions to buy Disney primarily because of ESPN and its adaptability across multiple platforms.

[Tugg Speedman]

Your over analyzing the situation. ESPN is the premier cable network. It will just be a little less profitable. Apple is in discussions to buy Disney primarily because of ESPN and its adaptability across multiple platforms.

Apple is buying Disney ... this is a rumor that has been recycled over and over for years.  The current rumor has the price at $240 billion.   

http://fortune.com/2017/04/13/apple-disney-mega-merger/


There have only been two mergers over $150 billion ever done ... AT&T/Time Warner at $165 billion in 2000 and Vodaphone/Mannesmann at $202 billion in 1999.  Both are considered disasters and no one has tried anything like this since because it generally understood that mega-mega mergers are very bad deals.

http://www.barrons.com/articles/an-apple-disney-tie-up-would-smack-of-desperation-1492230023
https://www.fool.com/investing/general/2017/04/13/2-reasons-why-apple-isnt-buying-disney.aspx
https://seekingalpha.com/article/4062345-apple-buying-disney-merging-2-overpriced-giants

Netflix for $75 billion makes a lot more sense.

And you're exactly right, ESPN is a premier cable network.  That is like being a premier buggy maker a decade after that car was invented.

Streaming (autos) was invented a decade ago and they are squeezing the cable networks (buggy makers) as their business model of forcing people to pay for their product that do not want is what technology is disrupting.

Either ESPN takes it hard or the sports leagues take it hard.  Days of getting billions from people that do not want your product are ending.  yes, it will take several years to end, but it is ending.

[TAMU, Knower of Ball]

Then ESPN is doomed (over time).  They get 50% of their revenues from people that do not want the product but are forced to take it as explained above.  As they people get more options (streaming or skinny bundles) they will elect to not give ESPN any more money.  ESPN could dramatically cut their fees but that has the same effect.

Yes ESPN is still profitable and if current trends hold, that should stay profitable for a few more years.  But the trends are against them.  They are on the road to "bleeding out" and they need to do something.

Again ESPN's "big mistake" was not understanding that 50% of their revenues was coming from people that do not want their product and ESPN truly believed they were "stuck" paying them forever so they went out and committed revenues from customers that do not want their product int he form of $8 billion in broadcasting fees per year.  Now these "stuck" ESPN customers are finding ways to cut-out ESPN and ESPN appears unable or incapable of doing anything to try and keep this 50%.

I don't think they are doomed. I think they will have to adjust how they spend their money....which is what they are doing.

[GGGG]

Maybe their current business model is doomed because in 20 years the playing field will change, but that doesn't mean the company is doomed. You are assuming they won't adapt and adjust.

[Tugg Speedman]

Maybe their current business model is doomed because in 20 years the playing field will change, but that doesn't mean the company is doomed. You are assuming they won't adapt and adjust.

You are correct ... I meant their current business model but short-handed into just ESPN.

That said, the single hardest thing for a business to do is to change their business model.  Entrenched thinking and legacy costs get in the way.  That is why businesses constantly get "disrupted" by start-ups and new thinking.  Old businesses are just incapable of changing to new ways and new cost structures.  Ask retailing (why didn't Walmart or Sears create Amazon), Newspapers (why don't they dominate the internet?) Taxi (why didn't they start Uber), Hotels (why didn't a large hotel change start AirBnB) and finally, ask the large networks (why didn't any one of them start ESPN).

It is will be very difficult for ESPN to change.  Based on history you should bet that will not.  That means their broadcast right will be won by competitors using different/new platforms and different/new business models.

So, yes many years from now there will be a thing called ESPN broadcasting sports.  But what the brand will mean to future TV watchers will mean something different than it does today.  And, history suggests that means it will be less valuable.

[TSmith34, Inc.]

Tim Tebow will do very well in life no matter what you say.

Which has nothing to do with anything discussed.

The glowing Tebow coverage was wall-to-wall.  The only thing MORE over discussed by ESPN was Favre's "will he or won't he?" retirement.

[ChitownSpaceForRent]

Which has nothing to do with anything discussed.

The glowing Tebow coverage was wall-to-wall.  The only thing MORE over discussed by ESPN was Favre's "will he or won't he?" retirement.

That was the worst. That's what annoyed me about ESPN. Favre comebacks, Tebow mania, Linsanity and months and months of coverage of Vick, Hernandez and Burress long after the trials were over.

[Mr. Sand-Knit]

Fotune places a " greater than 0% possibility on this happening".

[Herman Cain]

You are correct ... I meant their current business model but short-handed into just ESPN.

That said, the single hardest thing for a business to do is to change their business model.  Entrenched thinking and legacy costs get in the way.  That is why businesses constantly get "disrupted" by start-ups and new thinking.  Old businesses are just incapable of changing to new ways and new cost structures.  Ask retailing (why didn't Walmart or Sears create Amazon), Newspapers (why don't they dominate the internet?) Taxi (why didn't they start Uber), Hotels (why didn't a large hotel change start AirBnB) and finally, ask the large networks (why didn't any one of them start ESPN).

It is will be very difficult for ESPN to change.  Based on history you should bet that will not.  That means their broadcast right will be won by competitors using different/new platforms and different/new business models.

So, yes many years from now there will be a thing called ESPN broadcasting sports.  But what the brand will mean to future TV watchers will mean something different than it does today.  And, history suggests that means it will be less valuable.

There is still a need for an entity that will actually produce this content. ESPN Has a huge imbedded cost to cover these events.  The competitors are not exactly rushing to create more capacity. The platform may change but the ESPN brand will still dominate. At the end of the day the premium events will have to be guaranteed and ESPN has the capital to do a guaranteed deal.