Reporter | Yang Yuman
Since 2015, the well-known sports media ESPN has completed four large-scale layoffs. As 2023 draws to a close, ESPN's intention to "reduce costs and increase efficiency" has become more apparent in the past year.
ESPN, backed by Disney, is the world's largest cable sports channel and can provide sports news content 24/7. Since its launch in 1979, the business scope has undergone several adjustments. At the beginning of its broadcast, the content covered two major sectors: entertainment and sports, but later developed to only focus on sports news.
Looking back at the recent wave of layoffs caused by ESPN internally, it first laid off about 300 people in 2015; In 2017, approximately 100 employees were laid off, including hosts, journalists, and analysts. Sports celebrities such as Trent Deaver and Mark Stern were not spared.
In 2021, affected by the epidemic, the company also attempted to reduce operating costs through layoffs, laying off approximately 300 employees internally and keeping 200 positions vacant.
In early July 2023, according to The Wall Street Journal, ESPN laid off about 20 television commentators, including long-time basketball anchor and Rockets coach Jeff Van Gundy during the Yao Ming era.
Meanwhile, The Wall Street Journal reported seeing an internal notice from ESPN stating that in addition to layoffs, the company will also take measures to reduce salaries, including some commentators.
For a long time, ESPN has incurred significant expenses in hiring commentators. Troy Ackerman's annual salary reached 18 million US dollars, while "celebrities" such as Joe Buck and Stephen A. Smith both earned annual salaries in the tens of millions. The company's series of cost control measures may have a direct impact on their revenue.
In fact, layoffs and salary cuts are both means for ESPN to control costs and are also part of the overall strategy of the parent company Disney.
According to Bloomberg, on March 28, 2023, Disney has launched a layoff plan with a total of 7000 employees.
The number of layoffs this time accounts for about 3% of Disney's total employees, marking the company's first large-scale layoff since 2019, which could potentially save the company about $5.5 billion in costs.
In late November 2022, Robert Egger returned to Disney as CEO, replacing the former Bob Chapeck. This CEO made significant adjustments to Disney's core business units shortly after taking office.
Disney's business will be divided into three major segments: Disney Entertainment, Sports, Experience, and Products, with each department having a leader who is fully responsible for operations and financial affairs.
In early November 2023, Disney released its fourth quarter and full year reports for this fiscal year.
According to the financial report, Disney's revenue for the fiscal year 2023 was $88.898 billion (equivalent to RMB 643.8 billion), a year-on-year increase of 7%. However, at the same time, net profit decreased by about 25% year-on-year to $2.354 billion, indicating that the company's profitability was not satisfactory.
Looking at the three major sub sectors of entertainment, sports, and experience, the revenue reached 40.635 billion, 17.111 billion, and 32.549 billion US dollars respectively, while the operating profit was 1.444 billion, 2.465 billion, and 8.954 billion US dollars, respectively.
Among them, the operating profit of experience business increased by 23% year-on-year, but the operating profit of entertainment and sports business decreased by 32% and 9% respectively.
Due to insufficient contribution to the profits of the parent company, ESPN Chairman Jimmy Pitaro quickly made demands on various departments to carefully inspect the personnel situation, with the aim of improving the efficiency of layoffs.
In addition to employee salaries, another major cost expenditure for ESPN is purchasing copyrights. For example, the company reached a "sky high" broadcasting agreement with the National Football League (NFL) in 2021, paying an annual copyright fee of $2.7 billion to the NFL.
The cost of hiring a "celebrity" and high broadcasting costs have compressed profit margins. In the field of sports media, in addition to ESPN, multiple American sports media outlets such as Fox Sports, NBC Sports, and The Athletic have also carried out varying numbers of layoffs in order to control costs.