Layoffs Hit ESPN Amid Record Revenue

ESPN Logo - H 2012

ESPN Logo - H 2012

UPDATED: The Disney-owned company is shedding nearly 400 employees in a bid to make it more "competitive."

ESPN is laying off upwards of 400 employees, despite continued financial success for the Walt Disney Company-owned sports giant.

The network confirmed the news to The Hollywood Reporter on Tuesday, following an initial report by Deadspin, issuing the following statement: “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."  

News of layoffs come less than two weeks after Disney's media networks segment rose 6 percent to $4.96 billion, with operating income up 8 percent to $1.86 billion. One of the company's most consistently lucrative properties, ESPN has enjoyed increased affiliate revenue in 2013.

Forbes recently called ESPN "the world's most valuable media property," estimating its worth at $40 billion.

The layoffs are a first for the ESPN since it last shed staff in 2009. The company has about 7,000 employees, 4,000 in the U.S. and another 3,000 overseas. The move comes months after Disney lost 150 jobs from its film division, following a reported audit of its operations ordered by CEO Robert Iger.

ESPN, which held its annual upfront presentation for ad buyers in New York last week, faces a new competitor in the fall with the August launch of Fox Sports 1 in 81 million homes. ESPN president John Skipper addressed the new rival, noting that he's already fending off poaching efforts.

“We at ESPN like competition,” said Skipper. “It makes us better. It makes us sharper.”

The network has most of its expensive rights deals locked up for the foreseeable future, including the NFL, Major League Baseball, Wimbledon and multiple college football conferences (Big 12, ACC, Big East, Mountain West and the first-ever college football playoffs). And on May 16, ESPN announced that it has secured the rights to US Open tennis beginning in 2015. ESPN, which already has cable rights to the tournament, will pay an additional $825 million over 11 years for the rights to the finals, which have been broadcast on CBS for 46 years. ESPN is also investing in a brand new 10,000 square-foot studio for flagship SportsCenter to be unveiled next year. 

The network also has been the target of Sen. John McCain's effort to reform the cable television market with an a la carte approach that would let consumers choose which channels they want to pay for. Speaking to Bloomberg TV the day after ESPN's May 14 upfront presentation, McCain said the current system is "terribly wrong."

"Frankly, the most egregious of all is ESPN and there are many, many people like me, who do not like to watch ESPN yet they're faced with the prospect of paying about $5 more in their cable bill," said McCain. "They are paying more for these 100-some channels that they never watch."