ESPN President John Skipper Confirms Layoffs

ESPN Deal Puts MLB In Scoring Position

When ESPN president John Skipper (pictured) announced Aug. 28 that the cable network would pay $5.6 billion over eight years beginning in 2014 for a package of Major League Baseball games, baseball commissioner Bud Selig boasted of a "record-setting increase in the annual rights fee."

The top-rated sports net will pink slip about 300 employees in a reorganizational effort amid slowed growth and a contraction in lucrative subscriber fees.

After weeks of speculation about a round of layoffs at ESPN, network chief John Skipper confirmed Oct. 21 in a company-wide email that the sports leader would begin eliminating positions. He did not specify how many of ESPN's 8,000 employees will be impacted. But sources tell The Hollywood Reporter that approximately 300 employees will be phased out in a reorganizational effort that will re-allocate resources to data automation and technology. ESPN still generates outsize profits for parent Disney — more than $10 billion a year in revenue. But the layoffs come as ESPN is weathering slowed growth amid escalating sports rights fees and a contraction in all-important subscriber dollars.

Disney CEO Robert Iger has repeatedly stressed that ESPN is positioned to weather the contraction as more consumers cut the cord or move toward economical cable bundles that eliminate some high-ticket networks. ESPN is the most expensive network in cable and satellite at more than $6 a month per sub, according to data from SNL Kagan. During an August earnings call, Iger conceded that ESPN has experienced "some subscriber losses." Nielsen says ESPN has lost 3.2 million subs in a little over a year. But Iger pointed to long-term rights deals for the NBA, NFL and college football and strong advertising rates as helping ESPN stay atop the digital disruption.

Read Skipper's full memo below.

The demand for sports remains undiminished, though the landscape we operate in has never been more complex.

Our 36 years of continuous growth and success has been driven by our consistent willingness to reimagine our future, to embrace change and make the right choices for our business, including hard decisions that affect people who have been integral parts of our efforts.

Beginning today, we will be enacting a number of organizational changes at ESPN to better support our future goals – a process that will include the elimination of a number of positions, impacting friends and colleagues across the organization.

We carefully considered and deliberated alternatives before making each decision. The people who will be leaving us have been part of ESPN’s success, and they have our respect and appreciation for their contributions. We will be as supportive as we can during this transition, including providing a minimum of 60-days notice, a severance package reflective of their years of service, and outplacement benefits to help them find future employment.

These changes are part of a broad strategy to ensure we’re in position to make the most of new opportunities to build the future of ESPN. These ongoing initiatives include: Constant and relentless innovation, including integrating emerging technology into all aspects of our business; Enhancing our sales and marketing efforts with new tools and techniques that generate greater data, personalization and customization for our advertisers; Integrating our distribution efforts to better serve current and future distribution partners with our industry leading networks and services.

No matter how many times we’ve adjusted course to lead the industry over the years, the decisions affecting our employees are never made lightly. It never gets any easier, but it’s a necessary part of our continued strategic evolution to ensure ESPN remains the leader in sports as well as the premier sports destination on any platform.

I realize this process will be difficult – for everyone – but we believe the steps we are taking will ultimately create important competitive advantages for our business over the long term. I sincerely appreciate your professionalism and continued support as we move forward to ensure the continued success of ESPN and assure sports fans everywhere the best is yet to come.