The Network is sinking and parent company Disney is hoping to tap a ‘90s business model—and audience—to fix it.
ESPN, the ubiquitous hotel-lobby-bar-on-mute sports delivery juggernaut that used to buoy Disney’s media empire is now a once-venerable anchor dragging the Mouse down.
As subscribers continue to cut the cord, ESPN finds itself bereft of a viable business model. Online and streaming revenue is delivering a fraction of cable and satellite money and the network is in the middle of multiple multi-billion-dollar contracts with the N.B.A., MLB, MLS, NCAA Football and Basketball and the NFL.
The biggest harbinger of ESPN’s hubris and ultimate demise was the signing of a $15.2 billion contract to extend the Networks’ ownership of “Monday Night Football” through 2021 during the cable-ratings-rich early teens. Since then, the bottom has fallen out of NFL ratings in general and especially MNF, (off 24 percent in 2016 alone.) With a Millennial cohort abstaining, 80 percent does not “trust” or “look favorably” on the NFL, those numbers don’t look to rebound anytime soon. No wonder they brought known racist/homophobe Hank Williams Jr. back to sing the opening song—pandering to that Prilosec OTC-popping, boot scootin’, 55+ #maga hat-wearing grizzled-angry-and-dying branch of the old white guard.
…Speaking of throwback mentality, ESPN is going to the Jack Welch ‘90s CEO playbook and attempting to pump up the bottom line with layoffs (100+ staffers including on air talent since April, gone) and merging or eliminating several units as well as naming a new guru with a new job title and an untenable job description.
ESPN Monday named Connor Schell the network’s evp of content. Yep, content—all of it. Schell, in an ambiguous to Kushnerian levels role as ruler of all the things, will oversee TV, digital and print.
Over the last five years, Schell may be ESPN’s lone bright spot. He co-created (Bill Simmons being the other) and executive produced the 30 for 30 series which has garnered multiple Emmy Awards and a Peabody Award since its launch in 2007. He was also the Executive Producer of the Academy Award-winning documentary film “O.J.: Made in America” and produced that movie where Jon Hamm is a fish-out-of-water MLB scout in India that I somehow always end up watching exactly half of on connector flights.
Schell’s new responsibilities will also include studio and remote production as well as digital and print content creation. He will report directly to network head axe man John Skipper.
In order to install Schell, the Network dismissed 20-year veteran John Kosner, executive vp, digital and print media. Burke Magnus, an executive vp of programming and scheduling, was moved over to video streaming company BAMTech. In August, Disney took a $1 billion minority stake in BAMTech, which is currently owned by MLB Advanced Media and features the worst embed functionality ever. I would have a clip from them below, but it won’t load. So, there you go.
ESPN will also merge strategy and development under Justin Connelly, and digital product development will move to technology overseen by Aaron LaBerge.
ESPN’s losses are offset by Disney’s studio entertainment. In 2016, the studio took in $7.5 billion in total box office thanks to Rogue One: A Star Wars Story, Finding Dory and Captain America Civil War. Its amusement park brands continue to be profitable thanks to Walt Disney World in Florida and its new Shanghai theme park. Those helped offset declines at its locations in Paris, Hong Kong and California.
But concerns over the continued money suck at ESPN haunt Disney stock, which rebounded slightly in April in the wake of the layoffs after dipping 9% over the prior fiscal year. Today, the stock is trading around $105, off about 5% from its November, 2016 high of just over $120.
Since last fall, Nielsen reports ESPN is losing anywhere from 450,000 to 700,000 subscribers per month. In the last quarter of 2016, revenue from Disney’s cable networks dropped 7% to $4 billion. Once they’re gone, they don’t come back.