ESPN lost money hand over fist when it started, getting contracts with organizations like the Big East (back when that mattered) started it on a profitability arc that is normally reserved for companies that end in Dot Com. ESPN grew like mad, in both relationships with the other sports and in money pulled in. ESPN begat ESPN2, ESPN3 (remember when that was supposed to just be about the sports outside the “4 major sports”) and so on and so forth. The ABC takeover only accelerated this growth – and ESPN became a force for broadcast rights- and along with ABC sports, a cash cow that could throw money at everything, and put it on TV. Gone were the days of having two guys sit in a basement and make jokes about old films or trying to get Pro-Wrestling on TV to fill the dead times before the adults came home for SportsCenter.
Like every other Media Outlet, ESPN.Com had major traffic, and a lot had to do with people that you never saw on TV, it was a separate entity. Problem was, unlike SI, the other major competitor for “Sports Journalism” ESPN was not only decades behind in print, their major talents had no background in print- other than the old guys on “Sports Reporters” and people that wrote before coming on TV. People like Wilbon that could flow back and forth were few and far between.
Along Came Page 2. Ralph Wiley had a voice, Jason Whitlock, even Hunter S. Thompson wrote for a time there. As people on the main page began to really look horrible trying to do columns, actual sports reporters getting drawn more and more to the TV money and fame that came with it (Skip Bayless) ESPN was forced to close down Page 2 to get content ESPN. Certain Writers exploded, the biggest star being Bill Simmons. Simmons not only blew everyone away at Page 2, but moving to ESPN, drew more traffic there as well. than anyone else. Simmons made a . . .less than graceful move to TV, lets just say that, but got better, being a normal super-fan who had a chance to show that you didn’t have to play 15 years in the NBA to know the difference between a pick and roll and a Iso-Triangle.. Simmons made a fantastic transition to both books and Podcasting, two forms of Media that I’m sure ESPN was more than willing to let him try, even though it did cost them page-views. Simmons was even allowed to run over and start working on documentaries, the highly successful 30 for 30 series – an idea that started out to cover 30 forgotten or lesser known sports stories- yeah, that didn’t last long either.
To keep Simmons and some other talents happy, ESPN created Grantland , not only a place to groom future writers, but also a place to grow entertainment and music writers, Grantland has always been more of a disney umbrellas developmental area than an ESPN area, no matter what they would have you believe. The problem is, again, monetizing the site and getting a return for all the money being put out. SEO, Bandwidth, Site Design, and don’t forget Website Security, and none of that is cheap, and that’s before you pay the first person that is going to do a thing anyone wants to see. Thankfully Disney owns Getty Images, so they catch a big break there (check out thier prices sometimes) but you still have to pay writers, lawyers and back end people like salespeople to make it run as well as it does.
So what does this have to do with ESPN losing Colin Cowherd and Skip Bayless?
The Website is a necessary evil that any media corporation has to keep, it’s like tech support for you phone company. It’s a cost that you are going to pay as the price of doing business. If it makes money, yay. ESPN makes money off TV. It’s that 6.10 that gets added to your cable package for ESPN and all the families plus those that pay for all the college conference packages and FULL COURT, so on and so forth. The reason why people are leaving ESPN is simple. ESPN paid more than they should have to certain packages, like the SEC Network and the NBA package. Sadly, like many businesses, they look at payroll as the first thing to cut, and the easiest thing to cut. Shelving Grantland is a bit hard, you have some people you want to keep, like Barnwell and Lowe, some you can shuffle off, like Jalen and Jacoby, but a bunch you just can’t pawn off on other things, not like you can put Wesley Morris on Good Morning America.
The NBA is getting 1.4 BILLION from ESPN next year, and they have to pay for that. 6 bucks per household pays for that. But here is the thing, how much ESPN do you watch? I rarely will turn on ESPN. The only thing I really watch on ESPN is the 30 for 30 series. I don’t watch baseball, I haven’t watched SportCenter in a decade or more, so if I lost ESPN, would it hurt me?
DirecTV has struck first, tired of having to keep bumping prices to make certain channels happy. They introduced a package the 49.95 Select, that does not have ESPN. As of last year, 7% of DirecTV customers have this package.
That’s over 1M customers. Think on it, that a little less than 73M that ESPN isn’t getting now. It’s even worse if you look at the bottom line, ESPN is DOWN 3.2 million subscribers over 2014 vs 2015, as Comcast followed suit. Do the math, that’s a serious chunk of change, and the reason why ESPN overpaid for the NBA, to make it a viable channel for the number 2 team sport in the nation. We will never get ala carte TV packages, but packages without ESPN will sell now. I watch more UFC than NBA regular season, so I’d pay 2 bucks for FS1 over 6 for ESPN. Thats a lot of money that ESPN used to be able to depend on that just isn’t there.
So ESPN is having to cut back, and payroll is almost always the first place to look. Now could ESPN tap into those Disney pockets and pay for Colin, Simmons, Skip and more that are coming? Sure. But good luck selling that to the Board. If ESPN costs Disney 5% of it’s profits, heads will roll. The person’s name on those TV contracts is going to be the person(s) gone. What will no Skip cost first take? 5% rating? 10? 15? People thought that the Daily Show would die when Craig Kilborne left, or Around the Horn in Max Kellerman left, and so on. Yes, some places it has killed a show, but ESPN can keep trying. Put SAS with Dan LeBatard, actually don’t. Put Bomani in there. Move SAS to the Radio-Only and give Jalen Rose and Scott Van Pelt a show.
Bottom line, the money faucet has been turned off at ESPN, and It has hit everyone, from the Website to the Radio and now the TV product. I’ll make a bet with you. Fox Sports is going to regret all this money it is pouring out. It’s like signing Revis Island at 33. Or anyone in Baseball to a 10 year deal. Looks good, but sooner or later you are going to be hating that deal.
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