ESPN is reportedly laying off 400 employees–or roughly 10% of its workforce–on Tuesday.
According to a report that originated on TheBigLead.com and the Gawker-owned sports rumor site Deadspin – and picked up by other outlets like Variety and Business Insider – ESPN will lay off up to 400 employees today. These are the first major lay-offs at the Connecticut based sports network since 2009, and the move caught employees at the high profile and highly profitable network totally off-guard.
In a statement, ESPN said:
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.
ESPN is part of the Disney empire, and reports are that Disney has directed ESPN to improve its profit margins, a directive that has been sent to other Disney divisions as well. ESPN has been investing a large amount of money buying up rights fees recently, including football and basketball deals with major conferences. And according to Deadspin, those fees have put the drag on the margins. They quote one of the laid off workers who was following Deadspin’s coverage, as follows:
I was laid off from ESPN today after 9 and a half years. Completely out of the blue, no warning at all. I was told it was 10% across the board, which would be roughly 400. I was told the reason was they needed to make their profit margin and they chose to do that via layoff of staff. (snip)
btw…..we were told that the layoffs ARE tied to the profit margin that ESPN needs to meet and the fact they haven’t met that number. Your comments about them buying all of these live rights and now needed to reduce overhead costs is dead on.
There are some conflicting reports on the nature of the lay-offs, with some reporting a 10% across the board cut, while Deadspin’s source indicates the cuts are primarily in one department:
The majority of the layoffs today and tomorrow are in Technology…something like 40 people, at least that’s what I’ve heard. All three HR people assigned to Technology are handling layoffs today and tomorrow. No idea what is going on in the other departments.
The network has come under fire from conservatives in the past few weeks for using coverage of the Boston Marathon bombing as an excuse to become a promotional tool for President Barack Obama, and for overhyping the coming out of basketball player Jason Collins after initially being criticized for not reporting on it more quickly. It is highly unlikely that any of these layoffs reflect any audience or revenue bleeding as a result of those two incidents. It is also worth noting that reporter Chris Broussard, who openly professed his Christian based objection to homosexuality at the time of Collin’s announcement, has had his profile increased at the network in the past week.
Fox Sports 1, the 24-hour all-sports cable channel, is set to debut this summer to challenge ESPN.