ESPN is losing subscribers.
ESPN is losing subscribers. - 
Listen To The Story
Marketplace

ESPN's in a lousy place.

The grand champion of sports TV is losing millions of subscribers, even while it is on the hook to pay billions to sports leagues for the rights to air games. That math doesn't cut it on Wall Street, giving rise to recent talk that the network, owned by Disney, is gearing up to lay off hundreds of employees to trim costs.

Those cuts would come on the heels of a talent drain at the network. In recent months, ESPN has lost some of its pricey, high-profile sportscasters, including Bill Simmons and Keith Olbermann.

John Brillhart knows a lot about ESPN's problems. He runs his own business outside Minneapolis.

"I'm a cord-cutting consultant," Brillhart said. "And what I do is I help people get rid of cable or satellite and use other options to watch television."

The idea that cable uninstaller is a hot new career track says a lot about why ESPN's corporate overlords are tightening belts. Cord-cutting customers are devastating.

"Consumers are looking for content in other places," said Brett Sappington, who directs research at Parks Associates. "So if your revenues are based significantly off of cable TV, then you get hit pretty hard by that."

Even if you hate sports and don't even know what channel ESPN is on, the network gets your money if you have cable.

"All of them are paying over $6 a month to get the network," said Brad Adgate, with Horizon Media.

That's a hefty number compared to what other channels charge cable companies. But big rates don't help if cable subscribers keep disappearing. ESPN has astounding bills to pay the NFL, NBA and others.

"They have contractual obligations to meet these rising sports rights, and so the only way to cut cost is they have to cut other costs that aren't the sports-rights costs, so they're cutting people," said Laura Martin, a senior analyst at Needham & Company.

Things will only get nastier for ESPN's legacy cable business. It's a company built on collecting six bucks a month from every cable-subscribing household, sports fans and non-fans alike. That's a selling point for Brillhart, the cord-cutting entrepreneur.

"A primary consumer of mine is customers that don't necessarily watch sports," he said.

 

“I think the best compliment I can give is not to say how much your programs have taught me (a ton), but how much Marketplace has motivated me to go out and teach myself.” – Michael in Arlington, VA

As a nonprofit news organization, what matters to us is the same thing that matters to you: being a source for trustworthy, independent news that makes people smarter about business and the economy. So if Marketplace has helped you understand the economy better, make more informed financial decisions or just encouraged you to think differently, we’re asking you to give a little something back.

Become a Marketplace Investor today – in whatever amount is right for you – and keep public service journalism strong. We’re grateful for your support.

Follow Mark Garrison at @GarrisonMark