MASSIVE ESPN LAYOFS! Will They Be Bankrupt? Clay Travis ReactsJul 01, 2023
Monster layoffs from ESPN that are currently underway as we speak, uh, and I'll just give you a few of the people that have been laid off, uh, so far, uh, by ESPN, uh, Jalen Rose, Jeff Van Gundy, um, Susie Colber , uh, Todd McShay, uh, there's a group. of people Steve Young who have worked at ESPN, many of them for a long time Max Kellerman Keyshawn Johnson many of them who have worked at ESPN for a long time and are otherwise paid very well. What's going on here in the first place? I've been fired, you know I started Kick because Fan House fired me.
It's no fun being fired. Many of you have worked at companies where you were also laid off, but I wish you all the best. They are recovering from layoffs, but this is what I think is important. The story here is that ESPN's business is collapsing rapidly and I've been arguing this for years. Some of you watching or listening to this now are nodding because I told you. Do you know exactly what was going to happen as the cord cutting accelerated? Basically, there used to be a hundred million cable and satellite subscribers to the ESPN channel, now we're down to around 70 million and that number may well fall to 50.
It continues to accelerate and as those cable subscribers come off ESPN's books, their revenue is going down
they're not making that money back on streaming and I'll talk about that in a second and simultaneously all the sports leagues are asking for more money for their sports rights, for example, the NBA is coming, the NFL just came up and That means ESPN is required to spend a lot more money on sports rights at the same time its revenue is plummeting from the cable and satellite package. That's a bad combination, to top it off
theyalso had to spend huge amounts of money on streaming and are actually losing money on streaming.
In fact, Disney, ESPN's parent company, has lost $11 billion, that's $1 billion with a B so far. in streaming they've lost $11 billion, they haven't made any money back at all, the profit margins at ESPN are shrinking and some people are saying, well, they're just going to Pivot and they'll switch to ESPN, plus they're not going to stream. Seasonal is much less profitable and so far we don't have the best sports available there, but eventually you
willhave to pay 200 or 300 a year for ESPN if you want to subscribe year-round and you still won't get the cable and satellite package Right, this whole thing is collapsing and what's happening is the business side is panicking and they're trying to cut tens of millions of dollars in annual salaries off of ESPN's books. and that's how you get the Susie Colbers of the world who have been there for a long time, the Max Kellermans, the Keyshawn Johnsons, uh, the Matt Hasselbecks, all those guys who make a lot of money are losing their jobs and ESPN is trying to save tens of millions of dollars now they have simultaneously hired Pat McAfee.
It's a tough situation for Pat McAfee because a lot of these guys are getting fired and a lot of people that we have a story about this right now online are criticizing Pat McAfee and saying "hey you." We're going to make $18 million a year, that's the reported deal, and all these people who make less than you are losing their jobs, it's not fair because ESPN says, "We're going to make a lot of money with this new Pat." McAfee shows that they may or may not, I don't know, but I never think it's fair to blame talent for their salaries, as a condition for other people losing their jobs, for example, Stephen A Smith is among the highest paid people at ESPN ESPN makes a lot of money from Stephen A Smith's talent, therefore, they can hire more people.
The first shot is a very profitable program. I'll give you an example. I am in my heart. It is one of the most lucrative. I'm sorry. The Clay and Buck show is one of the most lucrative products in my entire heart. In fact, they can make more money on Clay and Buck than any other show in my entire heart. Don't know. I don't look at everyone's books, they make a lot of money from us, which means I can invest and hire a lot more people based on how much money they can make from us, that's how business works.
The most lucrative and profitable parts of that business allow money to be spent on other parts of the business that may or may not make as much money, so I don't think it's fair to blame Pat McAfee, but I do think that the seismic structural attack that is currently happening in against the ESPN and Disney business in general is a great story and I've gotten ahead of myself and a lot of people were like, "Oh, you're wrong, Clay ESPN is making a ton of money, you have no idea what we're talking about no, that's not true.
ESPN's profit margin is declining rapidly over the next few years. They may go into the red, which is where Disney is losing money on ESPN, so on some level I feel like Disney can spin off ESPN. such maybe create a sports betting company. I don't know where this is going, but I know that ESPN's business is in dire shape and is in rapid decline. It's not likely to be successful in the next decade and I told you a decade ago that all this was happening. happen, so I'm not particularly happy about it, but if you go back and read everything I wrote, ESPN has been a middleman for a long time, the cable and satellite package was one of the best media deals of all time in terms of of profitability and how much everyone made and now everyone is cutting their cable and satellite bill and that bill is coming due, which means a lot more people are going to be laid off, even people who have been well paid and highly promoted within ESPN, so that that's the story about what's going on there the ongoing layoffs these won't be the last layoffs that
willhappen at ESPN will also happen more uh and things are going to continue to get worse in the cable and satellite media industry some will be able to broadcast correctly, some will be able to make the shift to the transmission.
I'll give you an example that I think is true. It doesn't cost much to make MSNBC, CNN or Fox News. What do I mean you cover the news? You don't have to buy the news, right, you have to buy Monday Night Football to put it on, you have to buy the NBA, you have to buy Major League Baseball to put all that on the air, it's very, very expensive to run a sports network and it What used to happen was that ESPN was the middleman when they had a hundred million subscribers, all paying monthly cable and satellite bills.
What ESPN would do would be to take all that money and then invest much of it into purchasing the sports rights that are now their pile of cash is dwindling, probably about half of all subscribers will be available in the next decade, they will go from 100 million to 50 million and ESPN will not be able to afford the same quality of sports programming which will reduce subscriptions even more and streaming will not save them. You have two ships sinking simultaneously. The cable and satellite business and the streaming business right now still make money from cable and satellite.
Eventually they don't earn anything from streaming. Many of them will be losers and I don't know how this will turn out. You've seen it on some level with what happened with the regional sports networks just when you think a lot of these teams aren't getting paid. now and the regional sports networks are basically
bankrupt. I think that may end up being the case for ESPN as well. I think ESPN may be heading towards
bankruptcy sooner rather than later.
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