Cash crunch at ESPN: What’s next? Interns anchoring SportsCenter?

OK, maybe it isn’t that bad. However, it appears as if John Skipper is toning down ESPN’s money-making machine.

With Bill Simmons gone and the pending of departures of Keith Olbermann and Colin Cowherd, ESPN clearly is reviewing its fiscal obligations when it comes to spending big money for big talent.

From Richard Sandomir of the New York Times:

While different factors contributed to their departures, they come at a time when ESPN is coping with rising production costs and soaring rights fees. ESPN paid $7.3 billion for the college football playoff, which made its debut earlier this year, and $15.2 billion for National Football League rights.

In each of the last four quarters, those big investments cut into operating profits of the cable networks division at the Walt Disney Company.

And, like other cable networks, ESPN is losing subscribers as customers leave their pay-TV providers and seek out unbundled viewing options like Netflix.

And there’s this passage:

Mark Shapiro, a former ESPN executive vice president, said it was coincidental that the three stars’ contracts were expiring as ESPN was “likely evolving its cost strategy in a climate of escalating rights fees and challenging margins, which is smart.”

Mr. Shapiro, now the chief content officer at IMG, added: “Only must-have talent will get the big-ticket deals, and the definition of must-have is shrinking.”

Who is or is not “must-have” can be seen in the divergent fates of Mr. Olbermann and Stephen A. Smith, co-host of “First Take,” the morning debate show on ESPN2. In the second quarter this year, the audience for Mr. Olbermann’s program was 147,000 viewers — not enough to induce ESPN to keep him. But over the same period, the audience for “First Take” averaged 387,000, and Mr. Smith recently signed a deal worth about $3 million a year.

Meanwhile, Matt Yoder of Awful Announcing has this perspective.

For the last two years, ESPN and President John Skipper seemed to stray away from that strategy by splashing the cash for the likes of Olbermann and Whitlock and Beadle to come back.  There were also a number of big dollar contracts dished out to keep the likes of Chris Fowler, Rece Davis, Jay Bilas, Kirk Herbstreit, Scott Van Pelt, and others in the fold.  But now with ESPN given a mandate from on high at Disney to slash costs everywhere at the network, Bristol will return to a tried and true mantra: nobody is bigger than the four letters.

Ever since ESPN became the self-proclaimed worldwide leader in sports, ESPN’s biggest star wasn’t a SportsCenter anchor or a radio host or a game announcer.  ESPN’s biggest star was ESPN.  The network was the biggest draw and nobody dare try to let their own starpower compete with it.

When Keith Olbermann and Dan Patrick turned the 11 PM ET edition of SportsCenter into The Big Show, the pairing became a cultural phenomenon.  How did ESPN react?  After Olbermann and Patrick each left the network, ESPN no longer put established pairings together for SportsCenter lest they create the same chemistry and success that Olbermann and Patrick did.  If I can put my Darren Rovell hat on for a moment, because it wasn’t about the individual, it was about the brand.


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