ESPN Layoffs Underway, as Latest Round of Disney Cuts Targets Sports Unit
ESPN on Monday morning began the first round of a series of layoffs that is expected to carry through early summer, all of which are part of an overarching Disney strategy to slash 7,000 jobs in a bid to reduce expenses by some $5.5 billion.
The cuts, which were heralded during Disney’s year-end earnings call in February, are the first to hit ESPN since November 2020, when approximately 300 staffers were laid off. It’s uncertain how many people will be impacted this time around; in the span of the last eight years, ESPN has eliminated north of 900 staffers, a roster that includes all aspects of the business, including management, back office, production, content and on-air talent.
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The layoffs are expected to continue through Thursday. The first name to surface this morning was a shocker, as veteran VP of corporate communications Mike Soltys announced he would be wrapping up his 43-year run in Bristol sometime next month. Soltys—who joined the network in 1980, just months after its launch—has worked for ESPN for 98% of its history.
Soltys broke the news to friends and colleagues in a LinkedIn post, in which he indicated that he was “open to new possibilities.” He closed out his note by offering thanks to “four decades of ESPN colleagues,” singling out the two execs who hired him so many years ago, ESPN founder Bill Rasmussen and original PR boss Rosa Gatti.
While other familiar names and faces are expected to be cut throughout the process, on-camera staffers are unlikely to be among them. According to a memo ESPN president Jimmy Pitaro issued to all employees earlier this morning, cuts among those in “front-facing talent roles” will occur after a second round of general layoffs is made in early summer.
“As we advance as a core segment of Disney, with operational control and financial responsibility, we must further identify ways to be efficient and nimble,” Pitaro wrote. “We will continue to focus our workforce on initiatives that are most closely aligned with our critical priorities and emphasize decision-making and responsibility deeper into the organization.”
Pitaro went on to rue the “enormous toll of saying goodbye to dedicated colleagues that have worked tirelessly to strengthen ESPN and deliver for sports fans.” He closed out the memo with a reminder that ESPN was “built on camaraderie, resilience and a collective passion to serve sports fans,” before asking that all staffers “please continue to be supportive of each other.”
As is the case with all linear cable outlets, ESPN is being pulled in two directions as it tries to shore up its eroding TV base while betting heavily on the streaming future. ESPN, as of this month, remains one of the most distributed networks on the cable dial, reaching 73.3 million TV homes. At its peak, the channel was in north of 100 million households; like all other outlets beholden to the economics of the cable bundle, ESPN has weathered a contraction as overall pay-TV subscriptions have plummeted.
At last count, the number of subscribers to the traditional cable/satellite/telco-TV bundle had dropped to 61.9 million U.S. homes, which marks a year-over-year decline of 10%. In the last eight years, nearly 40% of pay-TV customers have cut the cord, bringing overall penetration of the bundle to just 50% of all U.S. TV homes. At its peak, nearly nine out of every 10 homes subscribed to the bundle.
As the cable bundle withers, ESPN’s programming expenses continue to soar. In March 2021, Disney re-upped with the NFL—which accounts for 20% of ESPN’s overall viewership—in a deal valued at $2.6 billion per year, and that was just one of several rights deals the company has sorted out in the last few years. In a recent filing with the Securities and Exchange Commission, Disney said it will shell out $44.9 billion in rights fees between now and 2027.
Among the upcoming renewals ESPN is gearing up for is its longstanding deal with the NBA. Disney CEO Bob Iger has indicated that ESPN aims to retain its NBA package, which includes alternating possession (with Warner Bros. Discovery) of the Eastern and Western Conference Championship Series, as well as the NBA Finals. ESPN’s current deal is priced at $1.4 billion per year and is set to expire at the end of the 2024-25 season.
While Iger seems willing to agree to a much higher rights fee to maintain ESPN’s relationship with the NBA, leagues of lesser magnitude may need to look elsewhere for a future distribution deal. During Disney’s most recent earnings call, Iger suggested that Pitaro would likely have to be more discerning about inking new rights pacts, at least in the near future.
Speaking of massive payouts, the boomerang CEO will receive about $27 million in salary, bonuses and stock considerations under the terms of his two-year deal with Disney. Before briefly handing over the reins to Bob Chapek in February 2020, Iger had raked in $45.9 million during his previous stint at the top.
It is uncertain how Iger’s compensation squares with Pitaro’s Monday memo to ESPN staffers, which speaks of matters of “financial responsibility” and the necessity to “further identify ways to be efficient and nimble.”
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