But it’s mostly silly to blame politics for ESPN’s financial decline. The network makes most of its money from subscription fees, not advertising, and it’s pretty absurd to imagine that a Trump voter would hear a pro-multiculturalism comment on SportsCenter and respond by cancelling his entire cable subscription (which would mean no more Fox News.)
On strategy, there are several criticisms. First, the SportsBusiness Journal reported that when ESPN was negotiating its contracts with cable companies, it pushed for higher fees at the expense of ensuring that it was reaching as many cable subscribers as possible. This allowed carriers to offer cheaper “skinny bundles” that didn’t include ESPN. (Disney’s CEO, Bob Iger, called this report “not factually correct.”)
Second, ESPN spent $175 million on a state-of-the-art facility whose primary purpose was to update SportsCenter for the multi-screen world. But SportsCenter has faltered in a media environment where highlights and fast analysis are widely available around the internet. The network arguably should have taken a page from Netflix, which added subscribers by making exclusive original content. Right now, ESPN produces very little that anybody would want to watch the following week, or following year, aside from its 30 For 30 documentary series. Perhaps ESPN should be spending more on prestigious sports documentaries and dramas that attract new audiences who don’t need a 6 p.m. highlight show.
Subscribers are down 10 percent since 2012, viewership is down, and politics has recently had better TV numbers than sports. So, why isn’t ESPN doomed?
ESPN’s profits are declining, but it is still profitable and its revenue and number of employees are still both growing. Even in 2016, as the presidential election pulled attention from everything else in television, ESPN ranked as the highest-rated cable network among men and adults between ages 18 and 54, and second among total viewers in primetime. As Bill Simmons told Kafka, “it’s weird that people think they’re in trouble. They’re not in trouble. They’re just not going to be making money hand over fist, like they did six years ago.”
Still, one of the most common biases in media is that reporters miss the forest for the forest fires, focusing on crises over more-important, yet less exciting, trendlines. In 2015, ESPN laid off about 300 people, and it was a big story. Last week, it laid off 100 people, including several prominent on-air talents, and it was an even bigger story. But in the 18-month interim, its global workforce actually grew by 500 to 8,000—and it wasn’t a story at all.
The simple truth is that cable television in the United States was a simply extraordinary business model, which made ESPN one of the world’s most valuable media properties, and led to a massive increase in the cost of sports rights. Now the cable-TV model is declining even as the annual cost of sports-rights contracts are continuing to grow. That probably won’t destroy ESPN, but it will require the company to transition to a new business model in the future.