For a generation of sports fans, ESPN was the King of sports broadcasting. From the early 1990’s, it was edgy. It had sports announcers like Dan Patrick and Keith Olberman who combined humor and irrelevance in their sports coverage. (This was before Keith Olberman decided to become a hardcore leftist). ESPN was on top of the world. But today, the network is bleeding money and losing subscribers. Recently, they let 100 million dollars of on air salaries go This followed several hundred behind the scenes jobs two years ago which saved another hundreds of million dollars. The ESPN business model, depending on subscribers, is imploding.
Outkick the Coverage blogger Clay Travis noted:
“ESPN’s collapse is a basic business reality, just like when the subprime mortgage crisis bubble popped. ESPN assumed that its subscriber numbers were going to remain fairly stable as it spent billions on sports rights. This wasn’t a bad bet since its subscribers had gone up consistently from 1979 to 2011. But in 2011, the number of national cable subscribers peaked. Since that time they’ve been going down every month.”
The network gambled on buying sport rights including the NBA. With each subscriber paying 7 dollars, this looked like a good bet. However, now ESPN is losing 10,000 subscribers a day. It pays out 7.3 billion dollars in sports’ rights but has lost 13 million cable and satellite subscribers over the past several years. This represent 1 billion dollars in lost revenues. Those losses are growing. Based on conservative estimates, it may go from its present 86 million subscribers to 74 million by 2021.
Right now the estimate is that subscriber revenue produces a little over 7 billion dollars per year. This is less than the rights they presently pay out. While advertising dollars help the revenue stream, the subscriber revenue is declining. Accordingly, ESPN will start showing losses within the next four years.
Travis further noted:
‘”ESPN has the most to lose in all of media. In fact, ESPN by itself stands to lose as much money as over a hundred cable channels do combined. ESPN stands to lose three times as much from the collapse of cable than Fox, CBS, and NBC do combined. That’s because ESPN’s business model is more predicated on subscriber fees than any company in America.”
Travis observed that declines in cable and satellite subscribers hurts all channels. However, the loss of subscribers for CNN matters less since ESPN revenues depend more on subscribers. Additionally:
“If AMC makes less money in subscriber fees, they’ll pay for fewer TV shows, but ESPN’s entire business is predicated on the billions they owe for sports rights every year into the foreseeable future. ESPN made a bet that exclusive live sports rights would be the moat that protected Cinderella’s castle from all attackers. The problem is that moat flooded Cinderella’s castle instead.”
Fox makes 1.44 billion dollars off advertising from the NFL whereas ESPN makes only 285 million dollars. Part of the reason is that ESPN has fewer games and fewer audience watching. Travis Clay noted, they lost 1.7 billion dollars showing the NFL.
“From 1979 to 2011 ESPN had the best business model in the history of sports. (The cable and satellite bundle is the greatest money making venture in the history of media.) But starting in 2011 the business began to change. In a hurry. Most didn’t recognize it, but I wrote my first article about ESPN’s challenges in 2011. Right at the absolute peak of the cable market, I wrote this piece, “Why ESPN has already lost the future.” I didn’t get everything right — far from it — but my basic thesis was correct — ESPN was a glorified middleman that most didn’t need. ESPN realized this and overpaid for sports rights to ensure its continuing relevancy.”
One way it decided to increase ratings was to be left wing sport casting where on air talent pontificated on politics even though much of the audience tend to be male and conservative. It is hardly a way to advance your ratings. Do not insult the majority of your audience. This audience doesn’t watch sports to see a bunch of political crap coming through the TV.
Clay Travis noted on this strategy:
“ESPN is trying desperately to stay relevant as ratings collapse and subscribers flee. The decision? [Become] MSESPN, the home for far left wing politics and sports! Only, it’s not working.”
Sports is where we go to see heroes play and win. We want to escape life to simply enjoy competition. But, we don’t tune into sports to listen about politics. That is what Fox or MSNBC is for. Many of there on air personalities have been released or demoted if they stray from leftist views. This is noticed by many of its former fans. While this is not the only reason or the main reason why ESPN is losing audience, it has hurt with many sports fans, the base ESPN needs to win and keep in the future to avoid further losses. Left wing politics and sports simply don’t mix if you want to keep your audience.