Is ESPN’s Star System Failing?

**John Ourand** (0:01)
In 2011, ESPN was in more than 100 million homes. Today, according to Nielsen, 54.3 million homes, so it's nearly cut in half.
So they have these costs, and at the same time, they just dropped half their homes.

**Peter Hamby** (0:17)
Welcome to The Powers That Be Daily, Pucks podcast focused on the intersection of Wall Street, Washington, Silicon Valley, and Hollywood and the players who run it all. I'm Peter Hamby. It's Friday, July 24th. Today, I'm joined by John Ourand, who breaks down the most recent round of layoffs at ESPN, which included some big names like baseball analyst Carl Ravitch and NFL talker Ryan Clark, who was let go during a commercial break while live on air. What's really going on in Bristol? John has the goods. We also dig in to Tom Brady's cringy Divorce Dad PR Tour, including his latest publicity stunt with Logan Paul, and ask whether Brady is scuffing his pristine brand and his reputation inside Fox. We'll discuss all that and much more on today's episode of The Powers That Be.
Happy Friday, everybody, and welcome to The Powers That Be. I'm joined today by my colleague and pal, John Ourand. We're going to talk about layoffs at ESPN featuring some big names, Carl Ravitch, Ryan Clark. What's going on behind the scenes in Connecticut? Also, speaking of decisions, inscrutable decisions, what's going on with Tom Brady? What is he doing? The stupid PR campaign with Logan Paul that's giving big divorced dad energy. Anyway, John, it's great to see you. It's good to hang with you in DC.
Our pals at Puck threw me a little welcome to the team party. And of course, you showed up and I gave you a big shout out as the best Orioles beat writer south of Silver Spring. It's good to see you. I'm excited to talk to you. Happy Friday.

**John Ourand** (2:07)
By the way, I love that shout out. I love it. Whenever Puck hosts something, it's like the hippest cocktail bar. I never go to places like that, but it was it was great to see. It was great to have you on full time at Puck.

**Peter Hamby** (2:18)
Yeah, it was it was a cool trip to DC and I miss it a lot. It's good to see a lot of old pals. Anyway, let's get into these ESPN layoffs that hit this week. I think Ryan Clark was probably the biggest name, their NFL analyst, but some long time names and faces that many listeners and viewers of ESPN are familiar with. All of this comes, I guess, based on our conversations, two big financial pressures. One, ESPN is giving a lot of money to Pat McAfee, of course, and they also have this ongoing relationship with the NFL and now NFL Network. I guess they're running the NFL Network now.
Are those two things related to these layoffs or is something else going on at Disney?

**John Ourand** (2:55)
Yeah, it's all related. I mean, so it's disingenuous to say that Pat McAfee and Stephen A Smith are getting all this money and that has no effect on everything. So of course, there's a little bit of an effect on it. But there are really two main reasons for the layoffs this year. One is in January, they did the deal with the NFL where they took over the NFL's media companies, so the NFL Network, NFL Red Zone. And there's a lot of redundancies between, you bring over a TV network, brings over another TV network, and so they waited. That happened in January.
Most of the layoffs affected people that were with NFL Network until that numbered around a hundred or so in Los Angeles.
And so that was a big part of these layoffs. But if you go back, you mentioned Carl Ravitch. He's a baseball guy. And these are also cuts that went Disney wide. You saw it in Pixar. You saw it in National Geographic. You saw it in ABC News as well. So it's more than just NFL Network coming over. It's what we've been reporting on for the past several years. The media business is in peril right now. And I have a stat in my newsletter that came out on Thursday night.
In 2011, ESPN was in more than 100 million homes. Today, according to Nielsen, 54.3 million homes. So it's nearly cut in half in terms of the number of homes that have been lost. As that's been happening, ESPN is paying the NBA $2.6 billion per year. They're currently paying the NFL $2.7 billion per year, and the NFL is negotiating to get more out of that. And so ESPN has to, they have these costs for these rights that continuously go up, especially the rights that they want. And they go up because all these other media companies want them. And at the same time, they just dropped half their homes. The app that they're launching and the streaming doesn't nearly make up for what was more than $10 per subscriber per month. I mean, that is a lot of money that they're going to have to sort of replace right there.