So Why Is ESPN Struggling & Why Should Cord Cutters Pay Attention?




August 26, 2011 - Austin, TX - Longhorn Network Studio: Empty set of the Longhorn Network Launch. Credit: Joe Faraoni/ESPN

This week ESPN laid off about 100 ESPN employees and immediately fingers started to get pointed at cord cutting as the reason.

This seems great for cord cutters right? We are taking down a big-time cable TV company … The truth is the real reason ESPN is failing is far more complicated. Others have tried to point the finger at ESPN’s effort to be more political, and still others are blaming ESPN’s recent spending splurges in an effort to buy up rights before FS1 or one of several other networks could get rights.

So what is the real reason ESPN is struggling?

The truth is there is no one reason. Yes cord cutting is part of the reason ESPN struggles; however, so is the fact that ESPN has been spending like a mad man at the bar. For example, last year ESPN agreed to keep spending $2.66 billion per year for the NBA.

ESPN also rushed out to launch new networks, such as the Longhorn Network, a cable channel that focuses on all things Texas Longhorns; however, it has been reported that the Longhorn Network is bleeding money. So much so that ESPN has cut the network down to a bare bones unit and it is rumored that ESPN plans to not extend its contract. It is reported that ESPN is dropping $26 million every year into the Longhorn Network.

We could keep going, but you get the idea. Back in the late 2000s and early 2010 when everything looked great ESPN, spent a lot of money to get rights to a long list of sporting events. Now these, in some cases 20-year contracts, are coming back to bite ESPN.

There is likely even truth that the recent growth of politics in ESPN has hurt the network. An ESPN “SportsCenter” anchor, Linda Cohn, recently said just that.

As with all things in life the truth likely is some place in the middle: part cord cutting, part overspending, and part content (aka politics). Put it all together and you likely have a better understanding of what is happening to ESPN.

So why blame cord cutting?

In short cord cutting is an easy out for cable executives (who it should be noted all kept their jobs at ESPN). Blaming cord cutting allows them to not have to look at their decisions and actions over the last few years.

It’s like the guy at the bar who is happy to blame everyone but himself for his struggles in life. Especially when you consider that if cord cutters wanted ESPN they could subscribe to Sling TV, PlayStation Vue, or DIRECTV NOW to name a few.

So why is this important to cord cutting?

There are two important things for cord cutters to understand here. First what is happening at ESPN is very different from what will take down networks such as the History Channel or AMC. They do not have the same long-term contracts that ESPN has, for example.

Second it is also important not to throw in the towel and say we won as some are trying to now push. Cord cutting is only just getting started. Don’t let the self-inflicted wounds of ESPN allow you to become overconfident.

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