The inside story of ESPN’s layoffs — and where it goes from here

If an entrepreneur was smart, that person should start some sort of sports content operation with many of the folks let go by ESPN Wednesday. You would have some major talent on the roster to hit the ground running from day one.

Then again, a smart entrepreneur might look at what’s going on at ESPN and look to invest elsewhere.

Clearly, the self-proclaimed “Worldwide Leader in Sports” no longer is the worldwide leader in printing money.

ESPN’s sprawling campus in Bristol, Connecticut was not a fun place Wednesday. An estimated 100 staffers were told their services were no longer required. Some of the names on the list were stunning (Andy Katz, Ed Werder, Trent Dilfer), given their longtime association with the network. And there are more names to come.

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At the core of this dramatic, if not drastic, move are the cord-cutters, which have seen ESPN’s subscriber base fall from 99 million to roughly 88 million in recent years. The falloff comes at a time when the network is on the hook for billions in long-term rights deals with various pro and college leagues.

Make no mistake, ESPN still makes a profit, but not as much as before. And the market trend doesn’t look as encouraging going forward.

Much like what has been happening with newspapers for more than a decade, ESPN needed to make some financial adjustments. As a result, many very good people are out of a job today.

Yet there is much more to this story, with everyone trying to figure out what it means for ESPN and the sports media industry. Here are some of my views:

Overstocked

For years when ESPN was flush with cash, it seemed to be hiring everybody. They were constantly adding to their roster on all their platforms. Let the good times roll.

Now that the economics have changed, ESPN re-examined that roster and seemingly said, “Do we need all these people?”

One ESPN insider used the word “bloated” to describe the staffing situation. Can it get by with four analysts for its NFL pregame shows instead of six?

Another industry insider with ties to ESPN told me, “They had a ton of people there before, and they still have a ton of people there now. Just a little bit less.”

Indeed, there will be about a 10 percent reduction in staff on its various platforms. ESPN looked at its new bottom line and decided it couldn’t afford the luxury of having such a big staff, especially with the digital operation.

One insider said many of the cuts were “metrics-driven.” Does the analyst or writer give ESPN a bang for its buck? In the case of the highly-paid staffers, the answer was no. ESPN essentially said how little it values hockey by gutting its NHL crew on ESPN.com.

Executives likely feel they can survive by offering less content – if also less quality — and still get the same ratings and number of pageviews. Fans still will come because of the ESPN brand.

Whether that will be the case remains to be seen. Bryan Curtis, a former Grantland staffer now writing for The Ringer raises the newspaper analogy in a column:

“The newspaper sports page left behind after the layoffs may have looked the same. But it was flimsier and more top-heavy and, on a slow news day, it was clear it didn’t have anything resembling a bench. Starting today, I think we’ll think the same thing about ESPN.”

Journalism 101

It is interesting to note that these cuts come at a time when ESPN is about to celebrate the one-year anniversary of The Undefeated. ESPN paid a premium for the site focused on the cross-section of sports, race and culture. It has around 50 staffers, and you can be sure some of the top editors command nice salaries.

Also, ESPN is set to announce enhanced versions of “Outside The Lines” and “E:60,” two shows that showcase the network’s best reporters. Both of those shows come with hefty investments.

So it is a bit of an overstatement to say ESPN is abandoning journalism because of Wednesday’s cuts. Executives clearly believe those platforms remain essential for ESPN. For now, at least.

Multi-dimensional

A veteran ESPN reporter said this line was the main takeaway from ESPN president John Skipper’s statement announcing the cuts:

“Dynamic change demands an increased focus on versatility and value, and as a result, we have been engaged in the challenging process of determining the talent — anchors, analysts, reporters, writers and those who handle play-by-play — necessary to meet those demands.”

“You better be able to do everything,” the veteran reporter said.

That means reporting, writing, and being able on go air, either on “SportsCenter” or ESPN.com and the ESPN app, at a moment’s notice. Also, you need to excel at social media, and not just Facebook and Twitter. It’s all about being able to pump out the content on as many platforms as possible.

ESPN looked at its vast roster and kept those it viewed as its best multi-dimensional players. Within a certain price range, of course.

Dream diminished

Nearly everyone who got dumped Wednesday talked of ESPN being “a dream job.”

Greg Ostendorf, a SEC reporter, sent out this tweet: “Growing up, working for ESPN was the dream. Today was my last day after 5-plus years, but I feel blessed to have gotten this opportunity.”

That dream was shattered for Ostendorf Wednesday, as it was for many others. As someone in the industry, your heart breaks for them.

For those who remain at ESPN, the dream also has been altered. After Wednesday, many of them will be looking over their shoulders, wondering if they’re next for future cuts.

Indeed, it is incumbent for Skipper and his crew to figure out how to better position ESPN in the new media landscape. If they can’t, there will be more days like Wednesday in Bristol.