Remember when we discussed how ESPN was the canary in the coal mine for the sports media industry? That seems to be coming to fruition as The Big Lead reported that ESPN may have to layoff 200-300 employees over the upcoming months. Although nothing is official, it was something industry experts saw coming due to the rising cost of production and television rights. ESPN is owned by Disney and is one of its main revenue drivers. The stock price is being affected by ESPN’s revenue generation and major changes had to be made. John Skipper, ESPN president, was recently extended until 2018 giving him the chance to make the necessary changes at the world wide leader.
It is now time to see if the increased-cost contagion spreads. Fox has been expanding its talent pool and both NBC and Fox are still contributing to increased rights costs in the sports media space. If ESPN is getting pressure from its parent company, it would stand to reason that NBC (Comcast) and Fox (Newscorp) could also feel similar pushes to cut costs from its boards and shareholders. Investing in sports properties is supposed to increase revenue not create loss-leader programming.
ESPN could also be ahead of its competitors by creating new technologies that contribute to running a more lean work staff. Most teams and leagues run as efficient as possible when it comes to human capital strategy and that could be a new trend in the sports media space.
Michael Colangelo is Managing Editor of The Fields of Green and Assistant Director at the USC Sports Business Institute.