The low-down on the slim down of ESPN
ESPN is one of The Walt Disney Company’s most profitable divisions, and the sports network is growing. But getting bigger has its price. For ESPN that means hundreds of layoffs now, to try to stay in the black long-term.
ESPN is building a huge new set for its flagship show SportsCenter, and it’s launching a network for the Southeastern Conference. But no pain, no gain — it’s cutting up to 400 jobs, out of about 7,000 worldwide.
“I thought it was a little surprising given the fact that the company has renewed so many deals with its cable and satellite partners, so its revenue structure’s relatively secure at this point,” says Tony Wible, a media analyst at Janney Capital Markets.
He says pro athletes’ salaries are driving up the cost of rights to broadcast live sports. And starting in August, ESPN will have to compete with Fox’s new sports network.
Don’t assume it’s laying people off to please shareholders, says Michael Greenberg, at the RAND Center for Corporate Ethics.
“What you would hope is that a responsible corporation that’s thinking about its long-term viability, that it genuinely is thinking about the impact of its strategic decisions,” he says.
ESPN says it’s confident the cuts will make the network more innovative.
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