SPN is reportedly planning to fire hundreds of people for the first time since 2009.
The company is still in great shape. It's still the most valuable media property in the world. It's still crushing its competitors. And it's still printing money.
But the rumored reason behind the layoffs — the soaring cost of broadcast rights eating into the company's profit margin — is a real concern for the future of the company.
ESPN is such a monolith because it charges the highest subscription fees on cable, in addition to ad revenue. It can justify those subscription rates because it controls a massive chunk of live sports broadcasting rights — a finite commodity that is getting more and more valuable as TV audiences for other types of programming continue to fragment into smaller groups.
The broadcast rights to live sports are going up for two reasons: 1) live sports is the only thing you have to watch live in the DVR era, and 2) the rise of NBC Sports, CBS Sports Network, and Fox Sports 1 has made bidding more competitive.
In the last 24 months, ESPN has agreed to huge rights deals with a bunch of leagues and events. Some of the highlights:
- $15.2 billion over 10 years for Monday Night football (73% higher annually than the previous deal).
Read more here.
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