ESPN on Tuesday began making a significant reduction of its work force, laying off more than 100 employees at its Bristol, Conn., headquarters and in at least one regional technology center.
While a precise headcount has not been confirmed, sources said as many as 150 people have been let go, a number that includes open positions that will not be filled. Some 4,000 employees work at the Bristol campus. All told, the company employs 7,000 workers worldwide.
ESPN acknowledged the layoffs in a statement released this afternoon: “We are implementing changes across the company to enhance our continued growth while smartly managing costs. While difficult, we are confident that it will make us more competitive, innovative and productive.”
The last time ESPN made deep cuts in payroll was in May 2009, when approximately 100 staffers were laid off and 200 vacant positions were left open.
The layoffs come on the heels of a record day on Wall Street for ESPN parent Walt Disney Co. On May 7, shares soared to a record $66.07 as the company delivered better-than-expected FY Q2 earnings.
ESPN did much of the heavy lifting for Disney’s media networks division, as the cable networks generated $3.46 billion in revenue for the three-month period that ended on March 30. Per RBC Capital estimates, ESPN accounts for 69 percent of Disney’s cable revenues; as such, the sports giant is likely to have delivered $2.4 billion in quarterly revenue.
In recent years, ESPN has laid out gargantuan sums of cash for the live sports rights that keep its engine purring. Last May, ESPN and the ACC inked a 15-year extension of their existing rights contract at a rate of $240 million per year or $3.6 billion. The rights to the new Bowl Championship Series playoffs will cost $560 million per year through 2025, while re-upping with Major League Baseball ($5.35 billion through 2021) and the National Football League ($15.5 billion through 2021) were two other high-profile moves.
The network’s current $3.88 billion deal with the National Basketball Association expires at the end of the 2015 season.
Another costly line item is ESPN’s new digital center, which is being erected in Bristol at a cost of around $125 million. Midway through its 2013-14 upfront presentation, ESPN last week gave media buyers and advertisers their first look at the Digital Center 2 facility and the new SportsCenter set.
On the other side of the ledger, ESPN makes a killing on affiliate fees, charging operators an average rate of $5.01 per subscriber per month, according to SNL Kagan estimates. Last year, the flagship network collected $5.96 billion in sub fees—more than four times what runner-up TNT earns in a year ($1.42 billion).
ESPN also beats all comers in the ad game, generating $2.07 billion in sales revenue at ESPN and ESPN2.
Shares of Disney were flat at $66.09 in mid-afternoon trading.