In less than 12 months, all of the following major on-air talking heads have left ESPN: Bill Simmons, Colin Cowherd, Keith Olbermann, Jason Whitlock, Mike Tirico, Skip Bayless, Curt Schilling, Cris Carter and Ray Lewis. These exits have led to screaming headlines about the “mass exodus” and “major upheaval” at the network that calls itself the “worldwide leader in sports.”
On Tuesday, ESPN parent company Disney (DIS) reported its second-quarter earnings, and they were not good. The mouse house missed expectations on earnings per share (EPS) and revenue for the first time since 2011. One of the details most focused on in stories about the earnings miss: ESPN again saw a decline in subscribers.
You might be tempted to connect those two things: ESPN’s subscriber dip and its recent loss of a slew of recognizable faces. But in fact, the latter may actually help stop the former.
Some of these big names reportedly jumped ship by choice, lured by mega money (Bayless, Tirico), while some were reportedly shown the door by the network over internal issues (Cowherd, Carter, Whitlock). But it doesn’t matter why each person left, or whether ESPN had wished to hold on to them or not, or whether many of them are going to competitor Fox Sports 1 (FOXA); ESPN will be stronger without them.
At a time when cord-cutting is growing rapidly, giving ESPN and other cable networks an urgent “adapt or die” challenge, expensive talent isn’t the smartest strategy for media giants anymore. And make no mistake, these folks are expensive. Sports Illustrated reported that Bayless will get paid more than $5 million per year at Fox, plus get a $4 million signing bonus. An ESPN source tells Yahoo Finance that ESPN had no interest in matching that number, nor does it typically even give signing bonuses to media talent—at least “not at that level.”
The shedding of expensive talent from ESPN may have begun by accident, with the ugly divorce last summer from Bill Simmons and the closure of his web site Grantland, but now it is underway in earnest, and it will likely continue. It ought to continue because the kind of television content that figures like Cowherd and Bayless bring to the table is a hyperbolic, hot-take style of bloviating that was popular for many years, but there are indications it’s no longer what viewers want. Olbermann's show on ESPN2 was averaging 173,000 viewers and was canceled due to low ratings. (Tirico is a different story—a very talented commentator and a serious loss.)
Before leaving ESPN, Cowherd made comments about the intelligence of baseball players from the Dominican Republic; Lewis famously said that Tom Brady is only a star quarterback because of the NFL’s tuck rule, then had to walk the comment back; Carter infamously got caught on camera instructing a class of new NFL rookies to “get a fall guy,” someone to blame in case they get in disciplinary trouble.
These are just scattered examples, but all of them are symptoms of the same thoughtless style of commentating, and it is a style ESPN needs to move away from anyway. The popularity of a show like Katie Nolan’s “Garbage Time” on FS1 (which won a Sports Emmy this week) is a sign that humor, and diverse voices, are more popular now than loud white men arguing. Granted, “First Take” is meant to be an opinion show, but Bayless and his sparring partner Stephen A. Smith are too often inflammatory for the sake of being inflammatory. Young talent, and more diverse talent (Kate Fagan, Jemele Hill, Kara Lawson, and Adnan Virk, to name just a few) will be the smarter investment for ESPN moving forward.
There are additional positive indicators for the future of ESPN that dispel the popular narrative of a dying organization. For starters, although ESPN subscriptions were down again last quarter (Disney does not disclose by how much), operating income at Disney’s cable networks division grew 12% thanks to ESPN, which saw “lower programming costs and higher affiliate revenues.” The network did have lower advertising revenue, but due to lower ratings, which were “negatively impacted by the timing of CFP bowl games,” Disney CEO Bob Iger said. Indeed, the College Football Playoff semifinal games were held on New Year’s Eve, a risk that proved to be a ratings disaster ESPN is still recovering from. It plans to move kickoff of those games back an hour this year to conflict less with New Year’s Eve parties.
Last year, ESPN cut a deal with Dish Network (DISH) to allow users pay $20 a month to stream ESPN through Sling TV. This past January, ESPN partnered with Sony to launch two new channels in India. In February, ESPN announced a long-term deal with Chinese Internet giant Tencent (TCEHY) to provide exclusive streaming content to Tencent users on mobile. This month, it announced a partnership with Vice Media (in which Disney has a 10% stake) to run Vice Sports video content on ESPN platforms, and ESPN “30 for 30” content on Vice platforms. Next week, ESPN will launch its new longform web site, The Undefeated. It has invested heavily in new talent for the venture.
While none of these moves alone is so sexy, collectively they are signs of ESPN looking global, embracing streaming just a bit more, and attempting to reach sports consumers where they are. The network cannot yet offer what everyone truly wants—a standalone, full-access mobile option for cord-cutters—because it fears that would be the death of its television channel. But it is inching closer to that reality. This week, it finally reached a settlement in its ongoing dispute with Verizon over “skinny bundles.” The worldwide leader understands that it will eventually have to allow people to access its content with something other than a television, even if it is resistant to hurrying along that transition.
According to reports, ESPN recently ceded the first half of a six-year TV rights deal with the Big Ten football conference, starting in 2017, to Fox, which was willing to pay more than twice what ESPN had been paying. (The second half of the package is still up for bidding.) Although it is a loss to not have those games, some analysts have said it is an example of smart fiscal conservatism by ESPN, which needs to cut costs.
All of that is to say: ESPN is doing a lot right, and it has a lot of fight left in it. If the “exodus” of big talking heads continues, it may ultimately emerge even healthier than before.
Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.