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Cord cutters took another big slice out of ESPN


Cord cutters took another big slice out of ESPN

WATCH  |  Where will you be watching sports in five years?

Watching sports is more accessible than ever. But it comes at a cost.

ESPN slashed 100 jobs this week -- including household names like NFL writer Ed Werder and reporter Jayson Stark. The price to air games has surged and more people have cut the cord, eating into the sports network's profits.

It has spent billions of dollars on rights deals with sports leagues and college athletic conferences in recent years. In 2015, it laid off 300 employees to try to tackle these issues.

It's really about the transformation from a cable to a digital future.

“It’s really about the transformation from a cable to a digital future. That presents these networks with a whole list of new challenges and it requires structural transformation and reorganization," William Youmans, George Washington University professor of media and public affairs, told Circa.

Disney's crown jewel has seen millions drop their subscriptions in the last five years. Between 2011 and 2015, some seven million cable subscribers ended their plans. And ESPN lost over 600,000 cable watchers in the final three months of 2016 alone. 

The sports leader makes $7 per subscriber, meaning the cord cutters have cost the company nearly $1 billion. Sure, ESPN's revenue is still north of $7 billion, but the restructuring signals executives are aware the direction in which sports is moving.

...people don't want to pay for channels they're not going to watch.

"Cord cutting is starting to put some financial pressure on the cable and satellite distributors and part of the problem is that people don’t want to pay for channels they’re not going to watch," Youmans said.

Another threat to sports broadcasters like ESPN? Silicon Valley.

Tech titans like Google, Facebook and Amazon have upped their live streaming game and might be the next to bid big against ESPN and other traditional sports broadcasters for game rights.

Twitter and Yahoo have already paid big bucks to exclusively stream NFL games, and the MLB has for years successfully lured fans into tuning into games on their app. 

That would completely change the competitive environment.

"It’s very plausible that they could partner with a sort of production side by the leagues and sort of skip out the traditional channels like ESPN completely," Youmans said. "So that is a possibility and that would completely change the competitive environment."

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