ESPN Layoffs

[Tugg Speedman]

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.

Isn't this legacy thinking ... exactly why it is so hard for companies to change.

Look at what smaller sports do, produce their own content.  So couldn't the sports leagues (and conferences) produce it themselves?  They already have their own networks.

And as far as guaranteeing deals, that is why ESPN is in trouble.  This is now things work now, but might not work in the future.

This is an objective lesson for all of us.  Think a second how your business "works" now.  Recognize that in 5 or 10 years it will not work that way.  Also, recognize that you don't know today how it will work in 5 to 10 years.

Again, this is the single hardest thing for a business to do.  Know when to cling to the status quo and know when things are changing and go with it, even if the change hurts them (makes things more competitive.)

Like I said above, the bet is always legacy companies cannot make this change which is why new entrants take their business away.

[Pakuni]

Isn't this legacy thinking ... exactly why it is so hard for companies to change.

Look at what smaller sports do, produce their own content.  So couldn't the sports leagues (and conferences) produce it themselves?  They already have their own networks.

Why would the leagues want to take on the costs and risks of producing it themselves when they can sell the rights for 5-10 years in the future with a fixed, guaranteed stream of revenue and let someone else take the risk?

Keep in mind, holding NFL rights has benefits to the networks that go beyond whatever advertising revenue they can generate from broadcasting the games. Hell, the entire Fox broadcasting network might not exist today - and certainly not in its present form - if they didn't reap the indirect benefits the NFL platform gave them.
For the leagues, however, these secondary benefits really don't exist. they don't need games to serve as a lead-in for the "The Simpsons." They don't need breaks in the action to serve up a promo for what's upcoming on this week's "CSI: Wauwatosa" or to conveniently show the star of "Chicago Public Works" in the stands.
Both sides still benefit most from the current arrangement. It's no coincidence that the NFL saw fit to share its full slate of Thursday night games with CBS after having them half of them only on NFL Network.

[milwaukee ex-pat]

The platform may change but the ESPN brand will still dominate. from MU Fan in NY - This is why their seemingly going all in with mixing mainly left wing politics with sports may be a shortsighted strategy.  It damages their brand to a huge part of their potential audience and seems to be completely unnecessary - maintaining non political sports content might marginally have lesser ratings than the loud mouth stuff in the current state of the medium but over time I would guess it would pay off by keeping a much larger customer base in play.  Guess we'll see,

[Tugg Speedman]

Why would the leagues want to take on the costs and risks of producing it themselves when they can sell the rights for 5-10 years in the future with a fixed, guaranteed stream of revenue and let someone else take the risk?

Keep in mind, holding NFL rights has benefits to the networks that go beyond whatever advertising revenue they can generate from broadcasting the games. Hell, the entire Fox broadcasting network might not exist today - and certainly not in its present form - if they didn't reap the indirect benefits the NFL platform gave them.
For the leagues, however, these secondary benefits really don't exist. they don't need games to serve as a lead-in for the "The Simpsons." They don't need breaks in the action to serve up a promo for what's upcoming on this week's "CSI: Wauwatosa" or to conveniently show the star of "Chicago Public Works" in the stands.
Both sides still benefit most from the current arrangement. It's no coincidence that the NFL saw fit to share its full slate of Thursday night games with CBS after having them half of them only on NFL Network.

This is all 100% correct EXCEPT it is a history lesson. 

What you describe worked when cable subscriptions were rising.  Now that they are declining, and again, the 50% that pay for sports that don't want it and are finding ways to get TV programming they want without paying for sports, this model, developed in the 1970s and 1980s, has to change.

[Pakuni]

This is all 100% correct EXCEPT it is a history lesson. 

What you describe worked when cable subscriptions were rising.  Now that they are declining, and again, the 50% that pay for sports that don't want it and are finding ways to get TV programming they want without paying for sports, this model, developed in the 1970s and 1980s, has to change.

The model could change, but the change won't be the leagues doing exactly what the networks are doing today.
And, again, I wouldn't be so sure the model will change, at least not significantly. Networks have shown they're willing to take a loss on broadcast rights having those provide indirect benefits.

[Tugg Speedman]

The model could change, but the change won't be the leagues doing exactly what the networks are doing today.
And, again, I wouldn't be so sure the model will change, at least not significantly. Networks have shown they're willing to take a loss on broadcast rights having those provide indirect benefits.

Too late ...

ESPN slashed a ton of on-air baseball talent.  So how are they going to cover baseball?  By doing exactly what you said they would not, let MLB produce and pay for the show. (this is the beginning)

ESPN Adds MLB Network’s Intentional Talk To Afternoon Lineup
Intentional Talk to Debut May 1 on ESPN2, Continue to Air on MLB Network
By SVG Staff
Monday, May 1, 2017 - 2:48 pm

http://www.sportsvideo.org/2017/05/01/espn-adds-mlb-networks-intentional-talk-to-afternoon-lineup/

As part of a new collaborative effort between ESPN and MLB Network, the two entities today announced that ESPN will add MLB Network’s popular studio program Intentional Talk to its afternoon lineup starting Monday, May 1. The year-round, weekday show will air Monday through Friday on ESPN2 from 4-5 p.m. ET during the season, and will air as a 30-minute telecast in the offseason. Intentional Talk will also continue to air in its regular 5 p.m. timeslot on MLB Network.

-----------------

Next up is ESPN ditching their football talent to re-broadcast NFLTV shows, then ditch hockey talent to re-broadcast NHLTV talent.

And 50 million people that pay $7/month and don't watch it, will continue to pay for it because now it offers sloppy seconds from the MLB Network?

[Herman Cain]

The platform may change but the ESPN brand will still dominate. from MU Fan in NY - This is why their seemingly going all in with mixing mainly left wing politics with sports may be a shortsighted strategy.  It damages their brand to a huge part of their potential audience and seems to be completely unnecessary - maintaining non political sports content might marginally have lesser ratings than the loud mouth stuff in the current state of the medium but over time I would guess it would pay off by keeping a much larger customer base in play.  Guess we'll see,

We are not allowed to talk politics on this site. The issue you point out is definitely something that is eroding their brand. That can be reversed though .

[Herman Cain]

Too late ...

ESPN slashed a ton of on-air baseball talent.  So how are they going to cover baseball?  By doing exactly what you said they would not, let MLB produce and pay for the show. (this is the beginning)

ESPN Adds MLB Network’s Intentional Talk To Afternoon Lineup
Intentional Talk to Debut May 1 on ESPN2, Continue to Air on MLB Network
By SVG Staff
Monday, May 1, 2017 - 2:48 pm

http://www.sportsvideo.org/2017/05/01/espn-adds-mlb-networks-intentional-talk-to-afternoon-lineup/

As part of a new collaborative effort between ESPN and MLB Network, the two entities today announced that ESPN will add MLB Network’s popular studio program Intentional Talk to its afternoon lineup starting Monday, May 1. The year-round, weekday show will air Monday through Friday on ESPN2 from 4-5 p.m. ET during the season, and will air as a 30-minute telecast in the offseason. Intentional Talk will also continue to air in its regular 5 p.m. timeslot on MLB Network.

-----------------

Next up is ESPN ditching their football talent to re-broadcast NFLTV shows, then ditch hockey talent to re-broadcast NHLTV talent.

And 50 million people that pay $7/month and don't watch it, will continue to pay for it because now it offers sloppy seconds from the MLB Network?

I think this deal you outlined demonstrated ESPN flexibility not the opposite.

[Tugg Speedman]

I think this deal you outlined demonstrated ESPN flexibility not the opposite.

Not when you charge as much as ESPN.  You need original programming that makes people want to pay for your product, the most expensive network you can get.  Half do not want the product.

Seems like ESPN has concluded they will bleed out over the next few years so they are cutting cost to pocket profits now before the entire thing blows up.

2012 they have 100 million subscribers.  Today it is 88 million.  When they get under 70 million, they are in real trouble.  5 years away?

[TAMU, Knower of Ball]

Not when you charge as much as ESPN.  You need original programming that makes people want to pay for your product, the most expensive network you can get.  Half do not want the product.

Seems like ESPN has concluded they will bleed out over the next few years so they are cutting cost to pocket profits now before the entire thing blows up.

2012 they have 100 million subscribers.  Today it is 88 million.  When they get under 70 million, they are in real trouble.  5 years away?

They will lose subscribers. Approximately 99% of the ones they will lose will be beyond their control. If people want to cut cords, ESPN creating original programming isn't going to come close to slowing that down. It will just drive up their costs while people continue to cut the cord

[MU82]

They will lose subscribers. Approximately 99% of the ones they will lose will be beyond their control. If people want to cut cords, ESPN creating original programming isn't going to come close to slowing that down. It will just drive up their costs while people continue to cut the cord

Agreed.

[Tugg Speedman]

They will lose subscribers. Approximately 99% of the ones they will lose will be beyond their control. If people want to cut cords, ESPN creating original programming isn't going to come close to slowing that down. It will just drive up their costs while people continue to cut the cord

This is most likely true, and the pro athletes and sports leagues better get ready because around 2022ish they will look backward and realize that that peak sports salary is happening now.

[TAMU, Knower of Ball]

This is most likely true, and the pro athletes and sports leagues better get ready because around 2022ish they will look backward and realize that that peak sports salary is happening now.

Yes. I think that's true.

[Herman Cain]

This is most likely true, and the pro athletes and sports leagues better get ready because around 2022ish they will look backward and realize that that peak sports salary is happening now.

Yes. I think that's true.

I agree with this Analysis.

[Tugg Speedman]

Still the champion?
ESPN is losing subscribers but it is still Disney’s cash machine
Sports fans are producing their own bootleg highlights
The Economist
May 6th 2017 | BRISTOL, CONNECTICUT

http://www.economist.com/news/business/21721664-sports-fans-are-producing-their-own-bootleg-highlights-espn-losing-subscribers-it

[Jockey]

Still the champion?
ESPN is losing subscribers but it is still Disney’s cash machine
Sports fans are producing their own bootleg highlights
The Economist
May 6th 2017 | BRISTOL, CONNECTICUT

http://www.economist.com/news/business/21721664-sports-fans-are-producing-their-own-bootleg-highlights-espn-losing-subscribers-it

This article makes me wonder, first of all, if you even read the stuff you post. Second, it make wonder if you have any clue on this stuff. You rant negatively about ESPN and how they are conducting business for weeks; then you present an article that is positive about the future.

Try picking a side, buddy.

[B. McBannerson]

You keep saying ESPN is in trouble, isn't that why they are making changes? This is what companies do.  They are also a cash cow at this point.    http://www.economist.com/news/business/21721664-sports-fans-are-producing-their-own-bootleg-highlights-espn-losing-subscribers-it

Your claim that sports rights fees are going down, will believe it when I see it.  Verizon spent $20M yesterday to broadcast ONE NFL game.  ONE.  The Jaguars, in a NFL Europe game in which half the country over on the west coast will be sleeping for a 6:30am start time.  https://www.recode.net/2017/5/3/15533736/verizon-nfl-stream-deal-jaguars-ravens

Amazon paid $50M a few weeks ago for Thursday night games, that's up from the $10M Twitter paid or the same rights last year.    https://www.bloomberg.com/news/videos/2017-04-05/amazon-pays-50m-for-nfl-streaming-rights-video

[mu03eng]

You keep saying ESPN is in trouble, isn't that why they are making changes? This is what companies do.  They are also a cash cow at this point.    http://www.economist.com/news/business/21721664-sports-fans-are-producing-their-own-bootleg-highlights-espn-losing-subscribers-it

Your claim that sports rights fees are going down, will believe it when I see it.  Verizon spent $20M yesterday to broadcast ONE NFL game.  ONE.  The Jaguars, in a NFL Europe game in which half the country over on the west coast will be sleeping for a 6:30am start time.  https://www.recode.net/2017/5/3/15533736/verizon-nfl-stream-deal-jaguars-ravens

Amazon paid $50M a few weeks ago for Thursday night games, that's up from the $10M Twitter paid or the same rights last year.    https://www.bloomberg.com/news/videos/2017-04-05/amazon-pays-50m-for-nfl-streaming-rights-video

I do wonder when ESPN forays into the eSports arena....would be interesting to see how that changes their model.

[warriorchick]

I do wonder when ESPN forays into the eSports arena....would be interesting to see how that changes their model.

I still find it hard to believe eSports are a thing.  I notice Deadspin is devoting more and more articles to it, and I am like, "Really?"

[Tugg Speedman]

This article makes me wonder, first of all, if you even read the stuff you post. Second, it make wonder if you have any clue on this stuff. You rant negatively about ESPN and how they are conducting business for weeks; then you present an article that is positive about the future.

Try picking a side, buddy.

I presented it without comment.  I should be closed minded like you and only present one side?

For the record I disagree with them.  And my disagreement is simple.  I show the chart again below.  It has to stop going down before it hits 75 million or they are in deep trouble.  Why should this trend stop?  Because you want it to stop?  That's not a reason, that's hope.

The only reason the chart will stop going down is ESPN massively cuts their fees.  But that has the same effect as going to 75 million described above, it puts them in a bad place.  They need it to stop at 87 million and still give them the ability to jake up fees.  Not happening, that business model died when this chart started down.

ESPN is the old joke (adapted for this case) ... what is the window washer that fell off the 100 millionth floor say as he crossed below the 88 millionth floor?  So far so good.

We all know this is going to end in a splat ... just arguing about how many years it will take.

[TAMU, Knower of Ball]

For the record I disagree with them.  And my disagreement is simple.  I show the chart again below.  It has to stop going down before it hits 75 million or they are in deep trouble.  Why should this trend stop?  Because you want it to stop?  That's not a reason, that's hope.

The only reason the chart will stop going down is ESPN massively cuts their fees.  But that has the same effect as going to 75 million described above, it puts them in a bad place.  They need it to stop at 87 million and still give them the ability to jake up fees.  Not happening, that business model died when this chart started down.

It's not going to stop (and I don't think anyone has said its going to stop). And there isn't anything that ESPN can do or could have done in the past to change that fact. Like someone said earlier, the guy making horseshoes in the 1920s was always going to end up losing customers. Nothing to be done. Cutting their fees would do next to nothing. The number of people who are cutting ESPN but not cutting cable is what? 1% of the subscribers they are losing? Cable is outdated. That is not ESPN's fault. They made the correct business decision to maximize their profits for as long as they could. Maybe tried to ride the wave a little too long. Now they need to adapt. They are starting to do that by cutting a lot of dead weight.

[jficke13]

Dang, thought this dumpster fire of a thread was dying. Guess not!

[mu03eng]

I still find it hard to believe eSports are a thing.  I notice Deadspin is devoting more and more articles to it, and I am like, "Really?"

Me neither and I've played video games my entire life.

[MU82]

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.

Oh, and speaking of Apple ...

Another all-time high for AAPL ... and the iPhone 8 hasn't even come out yet.

Who'da thunk it? (We all know who wouldn'ta thunk it!)

[Tugg Speedman]

It's not going to stop (and I don't think anyone has said its going to stop). And there isn't anything that ESPN can do or could have done in the past to change that fact. Like someone said earlier, the guy making horseshoes in the 1920s was always going to end up losing customers. Nothing to be done. Cutting their fees would do next to nothing. The number of people who are cutting ESPN but not cutting cable is what? 1% of the subscribers they are losing? Cable is outdated. That is not ESPN's fault. They made the correct business decision to maximize their profits for as long as they could. Maybe tried to ride the wave a little too long. Now they need to adapt. They are starting to do that by cutting a lot of dead weight.

Totally agree but it is not 99% of ESPN's losses are total cord cutters.  It more than 75% to 80%, the other 20% to 25% are going to skinny bundles without ESPN.

35% of Disney's revenues, and nearly half their profits, are from ESPN.  If you are correct, and I think you are, then they are in a world of hurt.  A giant part of their business is a giant one-time money grab and then it's gone in a few years.

--------------

Oh, 82, you are right about Apple.  Why don't you mention Disney or UnderArmour?  To fresh your memory, started a Superbar thread in August 2015 saying Disney was in deep doo-doo when the stock was $122 because of ESPN.  Chicos, confidently told me I did not know what I was talking about and he was buying, buying and buying.  Today Disney is $111 and the stock market is 14% higher.  Disney would have to be at $140 to keep pace with the overall market.  At $111 it is saying it agrees that Disney has "issues."  Restated, the stock market think Disney sucks.

Disney earnings are out Tuesday (May 9).  The 10-Q is over a 100 pages.  They have theme parks and movies.  But Bob Iger (CEO of Disney) and all the Disney shareholder care about one thing ... ESPN subscriber losses and the forecast for further subscriber losses.  Another billion dollar Star Wars movie is nice, but it is not moving the stock.

Underarmour  ... down 29% year-to-date making it one of the worst S&P 500 stocks this year.  Bottom line, Jordan Speith and Seth Curry are working for Free at UAA (because they took payment in stock).  Nice call by their agents!

So yes, start another 150 posts about Apple's new high and remind me I don't know what I'm talking about.