Technology is Killing ESPN, Not Politics

ESPN succeeded for years as a scam. Profits were boosted by millions of subscribers who never watched the channel. The scam is over.

The stupidest take of 2017 is the notion ESPN is in decline because of politics. If you believe that, you don’t understand how cable television works.

There was much discussion earlier this year when ESPN announced massive layoffs, a shocking departure for a cable channel that had been swimming in money for the past decade. It felt like there was no end in sight for the channel’s growth. They were throwing billions at college football, the NFL and NBA.

Ultimately, technology caught up and now ESPN is screwed.

The idea that politics played even a partial role in ESPN’s recent troubles is wrong to the point of absurdity. In the wake of the Jemele Hill controversy, there has been another round of blaming politics for ESPN’s declining ratings. It is simply not true.

ESPN is losing money because subscribers are cutting the cord. You don’t cut the cord with cable because of politics. You do so because of economics.

The economics are simple – ESPN has been getting away with grand larceny for nearly a decade. If you have basic cable, roughly $9 per month goes to ESPN whether you watch the channel or not. It is by far the most expensive cable channel on the lineup, far outpacing even other popular channels like USA or TNT, which charge roughly $1 per month on a retransmission or subscriber fee.

ESPN was able to charge these outlandish prices because they knew diehard sports fans would lose their minds if the biggest sporting events weren’t available. I like sports, so I have no problem with ESPN taking up a large chunk of my monthly cable bill. I need to watch the Rose Bowl. I need to watch the NBA playoffs. I need to watch UConn.

While it feels like sports fans dominate this country, the overwhelming majority of people do not watch sports on a daily basis. Look at ESPN’s numbers. At its peak, they had nearly 100 million subscribers. But even the most-watched event in the channel’s history – the first College Football Title Game – went unwatched by nearly 2/3s of ESPN’s subscribers.

And that, essentially, was ESPN’s scam – everyone who has cable pays them $9 a month just for the channel to be available. Whether they watched or not was nearly irrelevant to the channel’s bottom line.

Technology has whittled away at cable’s relevance and no channel will be more impacted than ESPN. Look at USA, for example, which charges about $1 per month. While those fees help USA’s bottom line, their success is directly tied to ratings and advertising. They must produce viewers to produce revenue. Whether viewers watch on their televisions, smartphones or laptops – the mission has not changed.

For ESPN, they have nowhere to expand with viewership. They’ve maximized their viewership. The problem is their previous revenue levels were completely out of whack when related to their audience. That’s why people throw around the $20-25 per month figures for what would happen if only ESPN viewers were willing to pay for ESPN.

Streaming services like Hulu and Netflix are making cable obsolete. It is hideous to look at my cable bill every month and rationalize why I pay so much for the honor of watching sports. I haven’t reach cord-cutting status yet but it’s on the horizon. Eventually, cable will die off, in the same way landlines have. Sure, some people still have a landline phone, but everyone has a cell phone.

The future of all entertainment – sports included – is either ad-supported (like CBS or NBC) or subscription-based (like Hulu or HBO) networks. We will either watch programming for free and pay for it by watching commercials, or pay to watch programming without commercials. We will not pay to watch commercials. The days of a network like ESPN being supported by both ads and subscriptions are nearing an end.

I don’t know what the future holds for ESPN. They’ve overspent on the NFL and the NBA. It’s absurd to realize ESPN pays roughly $100 million per game for Monday Night Football, while the Walking Dead brings in more viewers for $96 million fewer per episode.

The harsh reality for ESPN is they will be make less in the near future. Over the next decade, more people will cut the cord and more people will stop paying ESPN $10 a month for the honor of having access to the channel.

None of this has to do with politics. If anything, ESPN’s perceived acceptance of anti-Trump rhetoric should be helping! Look at how MSNBC and Stephen Colbert have benefitted, while Jimmy Fallon and Fox News has sputtered. The country, as a whole, hates Donald Trump!

Unfortunately, people like to superimpose their views over everything. So if you’re a Trump supporter looking for an outlet, bashing ESPN feels right. It’s also wrong.

ESPN’s troubles are just beginning. It has nothing to do with Donald Trump, and everything to do with a failure to prepare for technology.

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