After its parent company, Walt Disney Co., asked all its various divisions and subsidiaries to cut costs, ESPN has begun a series of massive layoffs that will cut approximately 400 workers.
In response to news of the impending layoffs, the company released a statement saying only, "We are implementing changes across the company to enhance our continued growth while smartly managing costs. While difficult, we are confident that it will make us more competitive, innovative and productive."
ESPN is an enormous employer both in the U.S. and abroad — with roughly 4,000 American employees and 3,000 international ones. The 2013 cuts are ESPN’s first major series of layoffs since 2009.
The cuts also do not appear to have been driven by financial problems within the network itself, which remains, the Atlantic reports, “extremely profitable;” rather, they appear intended to offset ESPN’s far-from-minor spending. As a result of its extensive spending elsewhere, then, ESPN has looked within its employee base to find the cuts demanded by Disney. For example, ESPN just closed on a 11-year deal for exclusive broadcast rights to the U.S. Open, beginning in 2015 — a deal that cost a reported $770 million.
The company-wide cuts at Disney are perhaps driven by a February dip in profit margins, which the New York Times reports is in part the fault of rising costs at ESPN.
Perhaps the most surprising thing about the news of the layoffs, though, is the way in which this news was broken: not by ESPN itself nor by another television magnate, but instead by Gawker Media website Deadspin, which was launched in 2005. The original Deadspin article, credited with breaking the story by the LA Times, Variety, and the Atlantic, was inspired by a tipster working for ESPN.
Although ESPN’s cuts do not appear to have been motivated by falling profit margins caused by sports coverage newcomers like Deadspin and the Bleacher Report, their deftness in picking up the story indicates that such websites will, in years to come, likely serve as breaking-sports-news outlets on par with ESPN.
We have already seen websites come to oust printed periodicals — Newsweek released its final print issue in 2012 and now exists only through the news website to which it was merged, the Daily Beast. But newscast television stations such as CNN and Fox News appear to be weathering the advent of the internet better than their printed counterparts.
Whether ESPN will manage to remain the country’s foremost provider of sports coverage and news remains to be seen, although ESPN execs are undoubtedly watching the growth of their potential, online, competition.