ESPN to Lay Off 300 as Disney Focuses on Direct-to-Consumer Streaming Video

Due to pandemic and Disney’s strategic reorganization

ESPN is laying off 300 people, or about 6% of its staff, and leaving 200 positions vacant as parent Disney shifts its focus on direct-to-consumer streaming video subscription services, reports The New York Times. The staffing changes, which primarily impact the network’s broadcast division, also stem from the pandemic which has dramatically affected companies worldwide. ESPN chairman Jimmy Pitaro notified staff in a memo last week. Pitaro oversees ESPN’s live sports programming plus sports, news, and original and non-scripted, sports-related content for ESPN+, ABC and cable.

Pivoting to direct-to-consumer streaming video

“Prior to the pandemic, we had been deeply engaged in strategizing how best to position ESPN for future success amidst tremendous disruption in how fans consumer sports. The pandemic’s significant impact on our business clearly accelerated those forward-looking discussions,” Pitaro wrote. “Placing resources in support of our direct-to-consumer business strategy, digital, and, of course, continued innovative television experiences, is more critical than ever.”

ESPN had already implemented some cost-cutting measures prior to this round of layoffs, including employee furloughs and pay reductions for executives and other highly-paid employees, said The New York Times. Some recognizable, high profile on-air personalities are likely to still keep their coveted spots, but others may see changes when their contracts come up for renewal.

Pitaro’s official announcement

Pitaro made a formal announcement in a news release last week.

“For some time, ESPN has been engaged in planning for its future amidst tremendous disruption in how fans consume sports. The pandemic’s effect on ESPN clearly accelerated our thinking on all fronts. Today, as a result of these circumstances, we informed our employees that we have made the difficult decision to reduce our workforce to create a more agile, efficient organization.

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We are parting ways with many exceptional teammates, all of whom have made important contributions to ESPN. These are not easy decisions, and we will work hard to make their transitions easier.

We will move forward in a manner that will allow us to continue to best serve sports fans,” Pitaro said.

Under parent company Disney, ESPN is pivoting to direct-to-consumer streaming video.
Under parent company Disney, ESPN is pivoting to direct-to-consumer streaming video. Image courtesy of ESPN.

Disney embraces direct-to-consumer streaming video

The pandemic and the temporary cessation of live sports had a direct impact on the ESPN layoffs, but Disney’s decision to reorganize the company also played a significant part. In mid October, Disney announced a strategic reorganization of the company’s media and entertainment businesses, focusing on its direct-to-consumer streaming video subscription services, including Disney+, Hulu and ESPN+.

“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our Company to more effectively support our growth strategy and increase shareholder value,” said Bob Chapek, CEO of The Walt Disney Company, in the announcement.

“Managing content creation distinct from distribution will allow us to be more effective and nimble in making the content consumers want most, delivered in the way they prefer to consume it. Our creative teams will concentrate on what they do best—making world-class, franchise-based content—while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms, including Disney+, Hulu, ESPN+ and the coming Star international streaming service,” added Chapek.

Insider Take

This news comes just three weeks after Disney’s announcement of the strategic reorganization. Given the major impact of the pandemic on Disney’s businesses, these cuts at ESPN and other strategic decisions are not necessarily a surprise, but they will hurt ESPN and its fans nonetheless. This year continues to bring dire news and strategic realignments as subscription companies try to make the right moves to remain sustainable going forward. Let’s hope these cuts are enough to make ESPN a lean machine without sacrificing quality sports programming.