ESPN Begins Major Layoffs Despite Enormous Profits

Satellite dishes outside of ESPN headquarters in Bristol, Conn.In November, Forbes called ESPN the world's most valuable media property. Earlier this month, the stock of ESPN's corporate parent Walt Disney Co. hit a record high. And on Tuesday, ESPN slashed its workforce.

Sources told Deadspin that ESPN was laying off staff "in the hundreds." ESPN refused to confirm any number, stating instead: "We are implementing changes across the company to enhance our continued growth while smartly managing costs. While difficult, we are confident that it will make us more competitive, innovative and productive."

One anonymous laid-off employee told Deadspin that 10 percent of the 4,000-person staff in Bristol, Conn., was getting the pink slip, but ESPN responded that the 400 estimate is "wrong and high."

In 2001 and 2009, ESPN also had large-scale layoffs but still ultimately grew its workforce, and The Wrap reports that the network still plans to hire at its new SEC Network. But the focus on efficiency comes on the heels of several expensive live sports-rights purchases, staff reductions across Disney divisions and increased competition from other cable sports networks.

"I was told the reason was they needed to make their profit margin and they chose to do that via layoff of staff," the now ex-employee, who claimed to have been with the network for 9½ years, told Deadspin. The entire 20-person staff of ESPN's Denver office also was dismantled on Monday, according to reports.

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ESPN, which averages 115 million viewers a month, is remarkably profitable. In the last quarter, the operating income of Disney's cable networks rose 15 percent to $1.72 billion, with Disney partly attributing that to ESPN's success. The laid-off worker also said that the last time there were layoffs, in 2009, older and more expensive workers faced the brunt of the bloodbath. The cable network stated at the time that it was replacing those jobs with others that "more effectively grow our company."

ESPN has a superb record of job creation in Connecticut. As the Hartford Courant reports, the network has received more than $100 million in state tax breaks over the past dozen years and special commendations from the governor for its positive contribution to the state's economy.

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ESPN's campus has also been physically growing for its 33-year history, from a single 20,000-square-foot building to a million-square-foot complex spread over 123 acres, connected by a shuttle bus. The network is currently completing its last new building for a decade, the Courant reported.

Although ESPN's story is one of dizzying success, it's a nervous moment for cable TV, as eyeballs rove to other platforms, such as the Web and mobile. A couple of months ago Fox also announced a new national sports cable network, with the clear goal of taking a bite out of the ESPN empire. And in the past year and a half, a number of ESPN's top female talents have defected to rival camps.

The network also recently cobbled several costly rights, including exclusive rights for 10 years to the college football playoffs, and for 11 years to tennis' U.S. Open.

"ESPN is the 800-pound gorilla," Fred Carstensen, the director of the Connecticut Center for Economic Analysis at the University of Connecticut, told the Courant. "Any time you are extraordinarily successful, you have to keep thinking about how to stay ahead of the competition. ESPN has to work hard to protect its franchise."

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ern5by5

I just hope this doesn't mean any less coverage of all the Tim Tebow non-stories.

May 22 2013 at 2:07 PM Report abuse +1 rate up rate down Reply
thosholzel

"I was told the reason was they needed to make their profit margin and they chose to do that via layoff of staff,"

So what's the big deal? Or do we want to be like France, where you can't fire anyone--so you don't hire anyione, either.

May 22 2013 at 1:27 PM Report abuse -1 rate up rate down Reply
jayjosephjr

Just another example of big business practice.Again more profits and tax credits to big business do NOT trickle down to more jobs .

May 22 2013 at 12:48 PM Report abuse +1 rate up rate down Reply
1 reply to jayjosephjr's comment
David

Take the tax credits and then lay off the employees. Repeat as often as allowed.

May 22 2013 at 1:15 PM Report abuse +1 rate up rate down Reply
toddisit

Profit first, people second!

May 22 2013 at 12:43 PM Report abuse +1 rate up rate down Reply
phipit

how will I get my round-the-clock Lakers coverage during NBA season and my non-stop Jets coverage during NFL season now?

May 22 2013 at 12:38 PM Report abuse rate up rate down Reply
hillpeabody

Lay off hundreds so the ceo's can get a bigger bonus. Greed it's the American way. Walt is probably rolling in his grave.

May 22 2013 at 12:03 PM Report abuse rate up rate down Reply
rich

I just permanently laid off ESPN and will never watch their hype-ridden telecasts again. We need to start shutting and avoiding these companies that clearly don't believe they have any responsibilities toward the nation and toward the world. If they don't want to use any of their enormous profits to retain workers, I don't want to waste any of my precious time patronizing their product. This is what is known as a "two-way street".

May 22 2013 at 12:00 PM Report abuse +2 rate up rate down Reply
goatcars

What they REALLY need is some more naked Erin Andews pics to boost ratings

May 22 2013 at 11:07 AM Report abuse rate up rate down Reply
BILL

They keep hiring multi millionaire ex athletes to be on camera but they lay off hundreds of average Joes who have to actually work for a living behind the camera to feed their families.they should cut salaries from the very top down if they really want to put more green in the botton line figures.there are enough rich employees they could let go first.

May 22 2013 at 8:32 AM Report abuse rate up rate down Reply
Tony

"smartly managing costs." Could this be the result of Obamacare?

May 22 2013 at 8:08 AM Report abuse -3 rate up rate down Reply

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