.
ESPN's ascent to juggernaut status in sports media may
have reached its pinnacle and begun its decent.
Demographic, technological and competitive
forces are eating away at the network's core revenues, undermining the
expensive business strategy to which it has wed itself.
The unfavorable trend resulting from developments it
failed to foresee may be exacerbated by the
Connecticut-based network's
journalistic missteps and its
puzzling forays into perceived advocacy of contentious
political,
cultural and
religious positions.
Considering the pressure
it faces from factors beyond its direct control, the obvious question is why ESPN would
complicate its task by advancing controversial
on-air stances sure to grate on the sensitivities of key segments of an
audience it desperately needs to retain.
More than three million ESPN subscribers have
evaporated as viewers, especially coveted younger ones, have ditched cable bundles for à la
carte alternatives. Online packages from Sling, Netflix, HBO, Amazon
Prime and other providers have destabilized the model that allowed
bloated cable TV bundles to exist.
ESPN has become addicted to the $6 cut it gets from your
cable TV payment each month, an extra toll you pay even if you don't watch the network. Viewers, primarily Millennials, are unplugging
the cord and plugging in to the Internet.
The stock price of ESPN parent company Disney plummeted
in recent months as this new reality splashed cold water in the face of
previously snoozing investors. The result has been immense pressure from
Disney's board room for its cash cow to get its financial affairs back
on track.
Budget cuts and layoffs are in the works as the suits in
Bristol scramble to cover the billions of dollars in bets they made in
the sports content licensing casino. Disney is reported to have mandated
that $350 million be slashed from planned expenditures by the network
over the next two years.
The licensing bets are locked in, so the cuts must come
from elsewhere. On the heels of the ousters of high-profile
personalities Bill Simmons, Keith Olbermann, Colin Cowherd and Jason
Whitlock, hundreds of rank and file staffers are expected to be cut
loose from their jobs.
Some reports indicate the money crunch at the
self-proclaimed World Wide Leader in Sports is so intense that
play-by-play announcers for some events will operate from the studio
instead of traveling to game sites.
The network has contractually obligated itself to pay
mammoth rights fees in coming years to the NFL, NBA, MLB, college conferences
and other entities. With less-than-expected revenue growth and greater
outlays for content baked into the forecast, ESPN's dilemma is a vexing one that has
profound implications.
The logical first step towards reversing the trend is to
stop digging the hole deeper. But whether it is arrogance or ignorance,
there are signs that ESPN
doesn't recognize the peril it faces. Instead of fostering loyalty from as
many of its most lucrative subscribers as possible, it seems to have
veered purposefully into
the arena of political correctness,
a move sure to annoy millions of its subscribers – especially among the
middle agers and baby boomers most likely to cling to cable as their
means of TV reception.
ESPN is skating on thin ice. It severely damaged its credibility with its
NFL lap dog reporting on Deflategate and its reluctance to correct the
record. Yet it ventures even closer to the edge by testing the limits of
how much
agenda-driven sports journalism
viewers will tolerate.
This column is not a statement on whether ESPN's
political and cultural postures are right or wrong. It is a warning that someone in authority at ESPN is making
a potentially monumental business mistake by pushing agendas that have
little to do with sports.
The insertion of divisive cultural and political spin and
prejudicial news coverage into its lineup of otherwise desirable
programming is risky business. Millions of viewers whose sole purpose for
coming to the network is to watch comprehensive and witty sports coverage
will take only so much preaching before choosing an unbundled option.
Be wary, ESPN. Be very wary. Vulnerabilities have been
exposed in your once invincible position. The Internet is your worst
nightmare. The 18-to-34-year-old generation has no loyalty to you but
has great fondness for streaming custom content to computers, tablets
and smartphones.
Perhaps most ominous of all for the network, the older
generations are gradually being drug, kicking and screaming, to the new
formats.
The TV viewing landscape is changing and you must change
with it, ESPN — or else.
And remove the politics from the mix or the challenges
you face may become much more formidable.
Send an e-mail message to Danny Whitford.
PAGE UPDATED
12/06/15 04:37 PM.
