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In Latest Media Purge, ESPN Lays Off 150 Staffers

By Published on .

ESPN President John Skipper on an ESPN set.
ESPN President John Skipper on an ESPN set. Credit: Melissa Rawlins / ESPN Images

ESPN on Wednesday began its latest round of layoffs, cutting ties with approximately 150 staffers in various production, technology and digital content positions. Today's eliminations mark the cable sports giant's third mass headcount reduction in two years.

In a brief memo sent to ESPN employees, president John Skipper said the company will look to alleviate the outgoing staffers' pain by offering them a package that includes "severance, a 2017 bonus, the continuation of health benefits and outplacement services."

The cuts "generally reflect decisions to do less in certain instances and re-direct resources," Skipper wrote. The ESPN chief, who also serves as co-chair of Disney Media Networks, recently extended his contract through 2021.

ESPN insiders say the company is not initiating a hiring freeze, a sentiment that echoed the final line of Skipper's note. "We will continue to invest in ways which will best position us to serve the modern sports fan and support the success of our business," Skipper wrote.

The company employs roughly 4,000 people at its Bristol, Connecticut, headquarters and 8,000 total worldwide.

The Sporting News first reported that the layoffs were in the works back in October. The cuts follow on the heels of ESPN's move to eliminate some 100 journalists and on-air talent in April; at the time, Skipper noted that "a necessary component of managing change involves constantly evaluating how we best utilize all of our resources, and that sometimes involves difficult decisions."

Among the household names who were let go in the spring include ESPNW linchpin Jane McManus, NFL reporter Ed Werder, "SportsCenter" anchor Jay Crawford, NFL analyst Trent Dilfer and college hoops analyst Len Elmore.

ESPN underwent an even more comprehensive purge in October 2015, when it let go of around 300 employees. That round of cuts came shortly after Disney CEO Bob Iger inadvertently precipitated a $60 billion media market cap meltdown when he addressed ESPN's recent subscriber losses during a quarterly earnings call.

Hard math

According to Nielsen cable coverage estimates, ESPN currently reaches 86.9 million subscribers, or 73 percent of all TV households. That marks a 2 percent dip versus the year-ago 88.4 million subs and a 13 percent drop compared to the 100.1 million subs ESPN reached back in 2011.

With an estimated affiliate fee of $7.86 per sub per month, ESPN is on track to take in $8.2 billion in subscriber revenue this year alone, a figure that does not include contributions from the spinoff channels ESPN2, ESPNU and SEC Network.

On the other side of the ledger, ESPN's dependence on live sports leaves it with a staggering rights-fee bill, as the cost of carrying the NFL, NBA, Major League Baseball, the College Football Playoff series and top-tier sports from the Power Five collegiate athletic conferences (ACC, SEC, Big Ten, Big 12, Pac-12) adds up to some $5.7 billion per year.

ESPN writes its fattest checks to the NFL and the NBA. The company's 8-year NFL contract, which expires in 2021, is worth $1.9 billion per year or $15.2 billion overall, while its new NBA pact prices out at $1.4 billion per season or $12.6 billion through 2025.

Per MoffettNathanson analysis, ESPN gets a disproportionately scant return on its NFL rights, airing the "Monday Night Football" package at an estimated cost of $43 per 1,000 gross ratings points. By comparison, CBS, which pays $1.4 billion per year for its NFL showcase, spends $9 for 1,000 pro football GRPs, while Fox ($1.1 billion) reaches that same number of viewers for $8. NBC for its part spends $11 to reach 1,000 viewers via its prime-time NFL portfolio ($1.4 billion).

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