The four people said ESPN first told them the layoffs were imminent in a memo sent by chairman Jimmy Pitaro on Thursday morning, and that they were notified via...
'Even worse than we thought': ESPN employees describe how its 300-person round of layoffs has unfolded and what they think the future holds
A leading-edge research firm focused on digital transformation.
At 8 a.m. Thursday morning, ESPN staffers around the world learned through an email from chairman Jimmy Pitaro that hundreds of jobs would be cut.
The sports network was laying off 300 staffers and eliminating 200 open roles, shrinking its roughly 6,000-person global workforce by about 5% (closer to 10% if you include the open roles).
"Today is hard because ESPN has always been — and will always be — fortified by its fantastic people," Pitaro wrote in a memo obtained by Business Insider.
Four ESPN staffers who were part of the cuts told Business Insider that they had been bracing for the layoffs after recent media reports sparked rumblings within the company that hundreds were imminent.
"Everybody at the company was like, 'Sh–, what does this mean?'" said one staffer, who was informed they were being let go on Thursday, and spoke under condition of anonymity so as to not to threaten future work prospects.
"We all kind of knew there was going to be layoffs coming at some point because of the Disney situation," said a second ESPN staffer, who was told on Thursday that their contract would not be renewed. "But it was even worse than we thought it was going to be."
The sources said there was no virtual town hall before or immediately after the memo to address the layoffs. All four were notified by phone, rather than video chat.
"It's a small indignity in the end," the first staffer said of not being able to see the people firing them.
ESPN wasn't the only Disney segment hit with layoffs this week. Deadline first reported on Thursday that the film studio's marketing group, the stage theatrical team, and Searchlight Pictures were impacted.
The coronavirus pandemic has dealt a major blow to Disney as it's had to delay blockbuster films and close its theme parks.In September, Disney said it would lay off 28,000 jobs in the US, mostly at its theme parks. Disneyland in California has been closed since March and Florida's Disney World reopened in July under safety guidelines. The Parks, Experiences, and Products division lost $3.5 billion in operating income in Disney's third quarter this year compared to last year.
At ESPN, the abrupt March shutdown of major live sports plunged the business into uncertainty, and the cable network was hurting from the rise in cord cutting driven by the economic pressures of the pandemic. As live sports picked back up, TV ratings remained strained across the sports landscape.The people Business Insider spoke with said that through it all, staffers were working harder than ever to prevent the layoffs they were seeing in other parts of Disney. Disney's media networks business, which includes ESPN, brought in $6.5 billion in revenue last quarter, down about 2% from last year, but comprising 55% of the company's total revenue that period.
"There's so many people you can point to throughout the company that worked themselves to the bone trying to find ways to make ESPN successful through COVID," said a third source, adding that some of those people are now among those laid off.
For some who revered ESPN and the people they worked with, the news was especially tough.
"I've never had a job that I so desperately wanted to keep," said the second source. "That's been the hardest part."
ESPN has not detailed what parts of the business are being affected by the layoffs, though The Los Angeles Times reported the cuts would span departments.
Pitaro told staffers in the memo that they would be hearing more about the future direction of the company in the "next few weeks."
Business Insider's sources said staffers had been notified about specific layoffs on Thursday and Friday. Some of those affected will remain in their roles for another 60 days before departing in early January.
The layoffs come as Disney reorients its entire media business around streaming.
ESPN, for years, has been shouldering ballooning sports-rights costs while pay-TV subscribers dwindle, placing more pressure on the network's margins. The company also laid off staffers in 2015 and 2017. And, last month, Disney shook up its organizational structure and positioned streaming, a business that isn't yet as profitable as the old legacy model, at the heart of the company.
ESPN has been trying to grow its streaming services ESPN Plus, which had 8.5 million subscribers as of June. Two weeks ago, the company announced it was bolstering the editorial content on ESPN Plus, which costs $5.99 per month.
One Wall Street analyst, who didn't expect the layoffs to impact Disney's overall financial outlook too much, said that the cuts were inevitable.
"I think it was always going to happen," said Tuna Amobi, an analyst at CFRA Research. "The handwriting was on the wall, but I think he pandemic has increased that urgency."
ESPN said as much in a statement on Thursday announcing the layoffs: "For some time, ESPN has been engaged in planning for its future amidst tremendous disruption in how fans consume sports. The pandemic's effect on ESPN clearly accelerated our thinking on all fronts." The company declined to comment further to Business Insider.
But one laid-off staffer questioned whether ESPN could stay on course with a smaller workforce.
"I have no idea what vast swaths of ESPN will look like in the months after this, or even years," the person said.
As you know, we value transparency in our internal dialogue, and that means in both good and challenging times. After much consideration, I have some difficult organizational decisions to share. We will be reducing our workforce, impacting approximately 300 valued team members, in addition to 200 open positions.
Today is hard because ESPN has always been — and will always be — fortified by its fantastic people. Teamwork, dedication, spirit and grit have built this place and are what make ESPN special.
Prior to the pandemic, we had been deeply engaged in strategizing how best to position ESPN for future success amidst tremendous disruption in how fans consume sports. The pandemic's significant impact on our business clearly accelerated those forward-looking discussions. In the short term, we enacted various steps like executive and talent salary reductions, furloughs and budget cuts, and we implemented innovative operations and production approaches, all in an effort to weather the COVID storm.
We have, however, reached an inflection point. The speed at which change is occurring requires great urgency, and we must now deliver on serving sports fans in a myriad of new ways. Placing resources in support of our direct-to-consumer business strategy, digital, and, of course, continued innovative television experiences, is more critical than ever.
However, building a successful future in a changing world means facing hard choices. Making informed decisions about how and where we need to go – and, as always, in the most efficient way possible - is by far the most challenging job of any leadership team. And, while it must be done looking through a business lens, it also must be done with great respect and genuine concern for people.
We are parting ways with some exceptional team members - some of whom have been here for a long time – and all of whom have made important contributions to ESPN. We're very grateful for all they've meant to us, and I assure you we are taking steps to make their transitions easier.
I am proud of the people at ESPN. Together, we have overcome tremendous challenges and adversity over these past several months and please know that the decisions and plans executed today were not made lightly. They are, however, necessary and I am convinced that we will move forward and effectively navigate this unprecedented disruption.
Our Human Resources and Communications teams will continue to keep you posted on any updates, and you'll be hearing more detail about our future direction in the next few weeks. In the meantime, if you have questions about anything outlined in this note, please do not hesitate to raise them with your leadership team or HR Business Partner.