ESPN has laid off NBA analysts Jalen Rose and Jeff Van Gundy. Studio host and boxing analyst Max Kellerman was also among the layoffs. In an obvious cost-cutting move, the world wide leader is moving on from on-air talent that they believe make too much money without moving the needle. But what does this mean for sports programing going forward?
Very Few On-Air Talents Move The Needle
On-air talent like Rose, Van Gundy, Kellerman, and Suzy Kolber and Keyshawn Johnson, who also were let go on Friday, don’t make the salaries that Stephen A. Smith or the newly signed Pat McAfee make; but they don’t move the needle like the latter two do either.
The reality is almost nobody in the sports media landscape impacts audience with just their name. We mentioned two, the other is FS1’s Skip Bayless. That’s it.
All the other on-air talent possess varying skills and are even liked by segments of the audience. But being kind of liked isn’t enough in today’s crowded media landscape where everyone is competing for mindshare.
Cash Rules Everything Around Me
ESPN is owned by the Disney Corporation and its $163 billion market cap. Disney is a publicly traded company, as such it has a fiduciary responsibility to its shareholders. CEO Bob Iger must report positive earnings every quarter.
One way companies make sure earnings go up is by cutting from its largest expense item on the corporate balance sheet. Payroll and benefits.
Disney spun ESPN out on its own as part of a company restructuring, with Parks, and Entertainment as the other two groups. In hindsight, maybe that wasn’t wise.
ESPN is a legacy brand in sports, but with linear television changing and the decline in cable subscriptions, their linear television-based model seems untenable. Particularly with the rising costs of live sports rights.
Just like in the NBA, with the new CBA it’s become impossible to continue to field expensive teams. So that talent due a raise is going to be let go in favor of someone making far less, and on it goes.
At ESPN, the real needle movers will be asked to do more and some talent just won’t be replaced.
“Given the current environment, ESPN has determined it necessary to identify some additional cost savings in the area of public-facing commentator salaries, and that process has begun,” an ESPN statement reads. “This is an extremely challenging process, involving individuals who have had tremendous impact on our company. These difficult decisions, based more on overall efficiency than merit, will help us meet our financial targets and ensure future growth.”
It’s about the dollars, y’all. As it always is.
McAfee was signed to a five-year deal for about $85 million at ESPN. Their bet is he can move the needle and draw eyeballs.
There is a large audience out there that wants sports and programming content. What kind of content they want, and how they want to consume it is something ESPN and every other media entity is trying to figure out.
