Cord-cutting is taking a toll on ESPN, once thought untouchable given its lock on sports coverage.
The cable-television network today said it's cutting 150 jobs. Employees who are affected will receive severance, a 2017 bonus and continuing health benefits and outplacement services, the company said.
ESPN wasn't the only media company to announce layoffs Wednesday, with BuzzFeed announcing layoffs affecting 8 percent of its workforce and a restructuring of its U.S. business team later.
"The majority of the jobs eliminated are in studio production, digital content, and technology and they generally reflect decisions to do less in certain instances and re-direct resources," according to a memo from ESPN president John Skipper, published at ESPN.com.
The cuts at ESPN come as the company is coping with the impact of cord-cutting, or when consumers get rid of the cable-TV connections in favor of streaming video. ESPN is reaching 7.4 percent fewer homes than it did just two years, which represents a major loss of revenue to the network. That's because cable-TV subscribers pay more than $6 a month to gain access to the sports network, providing ESPN with billions in annual revenue.
ESPN was betting on that revenue continuing indefinitely when it signed multiyear deals with professional sports leagues, such as a $15.2 billion deal for rights to air NFL games through 2021. But with its subscriber revenue falling, ESPN is still on the hook for its pricey packages.
The problems go beyond cord-cutting, according to a survey of consumers from Raymond James' technology and communications team. In a Tuesday research note, the investment company cited "cord shaving" as a stress for traditional TV and cable companies.
Consumers are increasingly trading down on their current video packages, opting for "skinny bundles" that offer fewer channels and a lower monthly fee. Netflix, meanwhile, is almost ubiquitous in U.S. homes, with 7 out of 10 households reporting watching the service.
About 19 percent of respondents in Raymond James' survey said they intend to shave their cable packages, compared with 7 percent who will cut the cord completely.
"The results once again show a surprisingly low value for ESPN and sports in general (17 percent for ESPN itself and 34 percent for sports overall), suggesting risk to sports related programing as cord shaving gets more refined, especially if consumers pressure carriers to give more choices that eliminate sports to reduce cost," the analysts noted.
Aside from dwindling cable subscribers, ESPN is also dealing with lower ratings for NFL games. Theories abound over what's impacting viewership, with some blaming natural disasters like Hurricane Harvey and others pointing to the controversy around some players' decisionand a resulting feud from President Donald Trump.
The picture is slightly different at BuzzFeed, which is facing a "significant" revenue shortfall this year, according to The Wall Street Journal. The company is facing increased competition for advertising dollars, which has added to the difficulty in meeting investor expectations for high revenue growth. The company is expected to lay off about 100 employees, the publication said.