A lot is changing at ESPN. And a lot more change is coming.
Gone is former IU basketball coach Bob Knight. Former Notre Dame football coach Lou Holtz is headed out the door too. Those are just two of the on-air personalities who are either leaving or having their roles greatly diminished at the all-sports cable network.
The Big Ten could be next. Many broadcasting-industry insiders expect the popular college conference to go elsewhere when ESPN’s contract with the Big Ten ends following the 2016-17 school year.
So what’s happening?
The short answer is that ESPN’s parent company, Walt Disney Co., wants the cable channel to cut costs and increase profit. The cost cutting has begun with a very big ax.
But why? ESPN is thought to be a cash cow, but apparently it’s running a bit dry—or at least cranking out skim milk.
The Wall Street Journal recently reported that the number of ESPN’s U.S. subscribers has fallen 7.2 percent since 2011. That’s millions of households. ESPN charges cable companies $6.61 per month per household, so that’s a lot of lost revenue.
At the same time, rights fees for college and pro sports leagues and events have skyrocketed. ESPN’s rights fee for the NBA alone will increase from $485 million to $1.47 billion annually starting next season.
Disney is ordering ESPN to cut $100 million from its 2016 budget and $250 million from its 2017 budget, according to The Hollywood Reporter. Clearly, something has to give. Cutting loose guys like Knight, Holtz, Mark Schlereth and Bram Weinstein will only save ESPN so much.
Even after nixing highly-paid talents such as Keith Olbermann and Bill Simmons and scuttling the much-ballyhooed move of the “Mike & Mike” radio show studio to Manhattan and the idea of adding a full-time female personality to the show, ESPN is reportedly looking to cut more.
If you’re curious just how serious ESPN is about cutting expenses, consider this: ESPN announcers called 47 college basketball games last year from a remote studio in Bristol, Connecticut, as opposed to sending them to the game to broadcast live. Despite tepid reviews of those games, ESPN likely will do more of that during the coming season. Any broadcaster will tell you that move is pretty drastic.
ESPN is paying the Big Ten $100 million annually to broadcast college football and basketball games. Big Ten officials are likely to ask for a lot more than that when they negotiate their next deal.
Big Ten Commissioner Jim Delaney said he expects to start talks with potential media partners this fall or winter. ESPN, Fox, CBS and NBC are all expected to express interest. If NBC—with its new all-sports cable channel thirsting for big-time content—makes the bidding war too fierce, don’t be surprised to see ESPN bow out.
It’s an interesting dilemma for ESPN. The Big Ten likely will ask for a hefty rights fee, since the college conference has as many—or more—fans than any in the nation.
Cutting ties with the Big Ten could save ESPN a good chunk of change. It could also accelerate its loss of viewers.