ESPN’s subscriber base is shrinking. Now its payroll is shrinking, too.
The cable sports giant says it is firing 300 of its 8,000 employees — more than 4 percent of its workforce. The cuts, first reported last month by The Big Lead, come a few months after Disney CEO Bob Iger told investors that ESPN had seen “some subscriber losses” — a comment that set off panic for all media company investors.
In an employee memo announcing the cuts, ESPN boss John Skipper takes pains not to attribute the cuts to cord-cutting or any other weakness at the company. Instead, he describes them as “part of a broad strategy to ensure we’re in position to make the most of new opportunities to build the future of ESPN.”
But even if ESPN wasn’t losing subscribers, it would be under pressure to cut costs, and has been for some time. Its content budget has continued to increase, as it locks up rights to what it hopes will be must-see (and must-pay-for) sports rights, but it has been reaching the limit of its ability to pass those costs on to pay TV distributors. Sources say that in recent planning meetings, ESPN’s projected growth rate for the next five years has alarmed Disney execs.
So while the company has been noodling with the idea of building out new revenue streams — like digital mini-subscriptions for the Cricket World Cup — it has been trying to rein in costs here and there. Two years ago, for instance, the company did away with free towel service at its Bristol, Conn., campus, which seems like a small thing until you learn how much it costs to wash thousands of towels.
But towels won’t cut it anymore. Next question: Are these ESPN’s last cuts?
This article originally appeared on Recode.net.