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ESPN's profits took a big dip. Instead of axeing Skip Bayless/Stephen A. Smith they close Grantland (already closed) and FiveThirtyEight (by end of the year).

Those are literally the only two ESPN properties I read. Strongly dislike ESPN. The cost cutting is largely due to their NBA bill (1.4 billion), and a declaration of getting out of "pop culture".

Too bad, hopefully Silver finds a new site. Really enjoyed it, ESPN bought the brand name and signed him as an employee. So it will have to be a new name/benefactor.

I haven't heard any such scuttle about FiveThirtyEight. Take the following tweet with a grain of salt:

[tweet]https://twitter.com/brianstelter/status/660157464697028608[/tweet]

keynote wrote:I haven't heard any such scuttle about FiveThirtyEight. Take the following tweet with a grain of salt:

[tweet]https://twitter.com/brianstelter/status/660157464697028608[/tweet]

From May 15th concerning Grantland...via ESPN President.

ESPN says that its dedication to Grantland won’t change. “ESPN remains committed to Grantland and we have a strong team in place,” ESPN president John Skipper said in a statement.

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I had a few friends laid off up in CT, apparently they are cutting anything which doesn't generate revenue, have to slash 250MM in expenses per order of ABC. Grantland and FiveThirtyEight are a few brands which lost money, and had high paid staffers. Ad rates are so low, it simply doesn't pay for pop writers even with tens of millions of page views.

Anyways I have it on good authority it's dead as of 2016. A few blogs about it as well. Supposedly all of the talking head types will be axed next year as well and their focus is on an ESPN Now type service and a "one man" sportscenter approach. Cord cutting is real, and accelerating quickly.

Same phenomenon which hit print media, music, Hollywood is now hitting cable networks. They're going to end up with 3-4 outlets in which they can't 100% control pricing. Roku, Apple are leading the way. Don't be shocked if Charter or Comcast buys out Roku.

A little more details, Grantland did 6 million visitors a *tiny* fraction vs ESPN last year (250 million). Assuming an average of 2 page views per visitor (Grantland had a bad habit of putting a book on one page) you're looking at 12 million page views. For fun let's call it an x3 so 18 million.

(18,000,000 / 1000) * 2.80 = 50,400 revenue

They employed 25 people, and were 100% web content. Consider an average of 30k in salary? 750,000. Even if you triple the ad revenue they lost massive money.

FiveThirtyEight has 2 million visitors. 15 or so staffers. Dead in the water. They likely have 20-30k in revenue and 450k+ in expenses. Lastly, Simmons pushed for the hire of Silver.

The more I write about it, the more killing the brands makes too much sense. Just too bad, they are both excellent sites.

Induveca wrote:A little more details, Grantland did 6 million visitors a *tiny* fraction vs ESPN last year (250 million). Assuming an average of 2 page views per visitor (Grantland had a bad habit of putting a book on one page) you're looking at 12 million page views. For fun let's call it an x3 so 18 million.

(18,000,000 / 1000) * 2.80 = 50,400 revenue

They employed 25 people, and were 100% web content. Consider an average of 30k in salary? 750,000. Even if you triple the ad revenue they lost massive money.

FiveThirtyEight has 2 million visitors. 15 or so staffers. Dead in the water. They likely have 20-30k in revenue and 450k+ in expenses. Lastly, Simmons pushed for the hire of Silver.

The more I write about it, the more killing the brands. Just too bad, they are both excellent sites.

Yeah, everything you say makes sense -- hence my "grain of salt".

Frankly, if I'm Mike Wise (or anyone else nominally hired to work on the mired-in-development-hell The Undefeated), I'd be sharpening up my resume and dusting off my rolodex.

Two caveats to those numbers - according to some sources, Grantland had an excellent demographic breakdown, being comprised mostly of affluent millennials. If true that would make the site a higher value market than page views alone can account for.

Probably more significantly, Grantland was also the launching pad for several popular podcasts. Simmons complained loudly that ESPN's marketing department dropped the ball on getting sponsors for those, and told him that it was impossible to get high paying ones. Meanwhile, now that he's on his own, he's been effusive about how easy it actually was to get good sponsors, and I've seen estimates of his podcast valuation in the 4-5 million dollar range.

TL;DR - Grantland was definitely not a money making machine. It was never meant to be. Still, I think there are some strong reasons to think that ESPN failed to take advantage of the site's unique strengths. If they had, it very likely could have turned a profit. (Maybe not the most exciting profit, but enough to keep on for the accolades and artistic bonafides it brought to the company)

Unless you are selling a service, you're essentially dead in the water if a text only property on the web, and going the CPM route.

Admittedly, video does have much higher CPM rates (see YouTube/Midroll). But only a select few have 100,000+ targeted downloads to justify a $15-20 CPM. That being said there are only a few metrics (downloads, partial download). The tricky part of "did they hear your ad?" becomes an issue.

Midroll takes 30-40% of that, Simmons is a client. He has 4 million downloads/month, and is at $30 CPM (finance or subscription based products only pay higher).

Now let's do the math. ((4M/1000)*30)*.50 = 72,000 / month.

I'm assuming he's giving 20% appearance fees, and broadband costs are running 20k/month. That leaves him with around 35k a month. Great little business for 2 people, but one launched via a massive fanbase built at ESPN.

With those numbers you see why ESPN wasn't very happy. Simmons can claim 1.2 million in revenue a year, but the net is close to zero after broadband/labor/ad, appearance fees. Even if ESPN's video ad rate is $150 CPM after costs 4/million a year gross was a negative with Simmons $3M salary.

With that 1.2 million figure at a 4-5x multiple he can claim a 4-5 million valuation. However he's dealing with fixed ad costs which can't be improved. In reality his valuation for an exit won't be touched until the "ESPN" effect wears off next April or so.

Is it a solid business for HIM? No doubt, but if he has hired more than 3 people he's losing money and promising investors growth. Hard to make that argument when he no longer has ESPN's marketing muscle and siphoned *all* of his users from ESPN from day one.

Consider Simmons salary at ESPN, $3 million/year. The guy is an awesome journalist, and highly entertaining. He needs to own his own brand, or sign onto HBO behind a paywall that brings them paying subscribers to come close to justifying such a salary in the new OTT world of video.

Sorry just my field, fascinating to me. And I love Simmons, and am rooting for him. He's damn smart. I suspect he'll be on HBO soon enough.

Induveca wrote:A little more details, Grantland did 6 million visitors a *tiny* fraction vs ESPN last year (250 million). Assuming an average of 2 page views per visitor (Grantland had a bad habit of putting a book on one page) you're looking at 12 million page views. For fun let's call it an x3 so 18 million.

(18,000,000 / 1000) * 2.80 = 50,400 revenue

They employed 25 people, and were 100% web content. Consider an average of 30k in salary? 750,000. Even if you triple the ad revenue they lost massive money.

FiveThirtyEight has 2 million visitors. 15 or so staffers. Dead in the water. They likely have 20-30k in revenue and 450k+ in expenses. Lastly, Simmons pushed for the hire of Silver.

The more I write about it, the more killing the brands makes too much sense. Just too bad, they are both excellent sites.

And I think an average of 30k is really low. These are some of the most in demand writers in their field. e.g. Wesley Morris turned down New York Times to go to Grantland and Zach Lowe left Sports Illustrated. Had to be big salaries.

With that said my argument in favor of keeping Grantland is this: First off even if Grantland lost say, 3-4 million a year, ESPN's yearly revenue in 2014 was like 11 billion I think. This is a drop in the hat and ESPN could have afforded keeping it for prestige reasons only. Before Grantland launched Simmons said he wanted it to be Miramax (famous Oscar film distributor) to ESPN's summer blockbusters.

There also may be financial value in that "brand power" of having an acclaimed site that is shared a lot on social media and wins awards for things like 30 for 30. ESPN's revenue is connected to each other. Grantland fans are sports diehards who need a place to check boxscores and watch Sportscentre. ESPN makes its money off TV first and ESPN.com second I think. So the financial value of Grantland extends a bit past page clicks. If someone becomes a bigger fan of ESPN through Grantland and it leads to more website clicks and a TV subscription Grantland is responsible for more revenue than is captured by the internet numbers

I make a comparison to a casino. Giving the drinks away for free if worth it if it leads to more gambling. Or another example I believe Britney and Celine make too much money for their ticket sales to cover the cost. It doesn't matter because the casino cares more about the traffic than the ticket sales anyways. They want the couple who spent $200 on the Britney tickets to spend $2000 on the hotel room and gambling.

Now it may be too generous to Grantland to pretend like they have near the powerful impact on traffic like that. But nevertheless I think ESPN could be making a mistake by messing around with their brand by getting rid of the most high quality personalities and firing people who do things like make sure the NBA boxscores work properly (Judging by how terrible the boxscores have been the last week, I assume that's related to the firings). When talking about saving say 3-4 million on Grantland and 15-20 million on the 300 producers they fired, out of 11 billion revenue, I don't know if ESPN penny pinching is a great idea. It's not like they're a website going under and this is a way to save 25% of revenue. What would it take for FoxSports1 and Foxsports.com to make a run at ESPN as the #1 world leader? Might be less than they think. Foxsports.com's boxscores are nice and people were talking about ARod and Pete Rose a lot this week

I haven't heard anything about FiveThirtyEight closing? The elections are coming up, that's when they get the most traffic. The sports aspect of it may not work out, but I'm a fan of 538's political stuff

FiveThirtyEight seemed an odd fit for ESPN. They make more sense for NY Times or Vox or the Atlantic. I'm a little sad to see Grantland go. It was home to a lot of good work.

TheSecretWeapon wrote:FiveThirtyEight seemed an odd fit for ESPN. They make more sense for NY Times or Vox or the Atlantic. I'm a little sad to see Grantland go. It was home to a lot of good work.

On the flip side, now's the chance for your blog to go BIG TIME. Power vacuum in the world of nerdy sports blogs. You only get a few big chances in your life, so don't blow this one. Good luck out there.

This is a shame. Grantland was an oasis of brilliant writers doing great work in a **** desert wasteland of sports and entertainment commentary.

I could take or leave 538 though. I enjoy their political commentary, it's outstanding. But their sports commentary is weak and their NBA coverage, in particular, was awful.

AFM wrote:

TheSecretWeapon wrote:FiveThirtyEight seemed an odd fit for ESPN. They make more sense for NY Times or Vox or the Atlantic. I'm a little sad to see Grantland go. It was home to a lot of good work.

On the flip side, now's the chance for your blog to go BIG TIME. Power vacuum in the world of nerdy sports blogs. You only get a few big chances in your life, so don't blow this one. Good luck out there.

Too busy trying your LED flashlight trick. So far so good.

Terrible decision by ESPN to close Grantland. I understand Indu's explanations, and the prima facie business situation is clear. But it seems spiteful, no matter what the financial reality is/was. I wish there was a will to continue it and explore other options than a complete shut down. Hopefully all the writers I enjoyed will migrate over to HBO with Simmons.

As for FiveThirtyEight, didn't it exist on its own prior to being bought by ESPN? This, more clearly than the Grantland situation, seems to indicate that the decision-makers at ESPN really didn't know what anyone else in the business (i.e., Indu, and to an extent, I) would clearly see. Unless their parameters or pain threshold has changed. But if that's the case, then bad strategic planning turned into really bad management. Why did they buy it in the first place? DotComs are not TV, whether they have video content or not.

Oh well. I find myself seeking alternatives to ESPN. Perhaps the light is fading on the Eternal SPorts Network.

WizTom, ESPN has lost 7.2% of its subscriber base in 4 years. 3.2 million subscriber decrease alone last year.

Disney has demanded them to slash costs, they're preparing for the inevitable transition to an OTT model no one has figured out yet.

70% of ESPN's revenue is from cable subscription fees, 25% of the 18-25% demographic don't have cable and its climbing quickly every year.

https://www.washingtonpost.com/news/early-lead/wp/2015/07/10/disney-is-making-espn-do-some-serious-cost-cutting/

Looks like ESPN is being hurt by people like me canceling cable/satellite TV. This summer, I saw an article indicating that roughly 8% of people had cancelled cable/satellite completely, and nearly half (I think it was 46% or 47%) had reduced the level of service by doing something like canceling premium channels. Something like 20% had cut premium sports packages.

Biggest gripes? Cost (that was one of mine -- I was paying $100+ per month and no one was watching anything), and crappy customer service (yep, I gave DirecTV three tries to install an HD satellite; they no-call/no-showed twice and canceled the other time 10 minutes AFTER their time window had expired).

ESPN was (at least in part) a driver of the increasing costs. They've been the most expensive network on cable/satellite for some time now. Their execs seemed to believe they'd keep adding subscribers while simultaneously increasing the price. Instead...disruptive technology FTW.

Yeah they're in a tough spot. 70% of revenue coming from cable subscribers. Yet most people keeping cable do so for the sports.....but the momentum behind cord cutting is reducing the sum value of that portion of revenue.

When ESPN offers a true standalone OTT option they'll quickly increase cord cutting across the US. Cable companies will fight/demand renegotiation, and Disney's stock will take a hit.

Bad timing with them spending roughly 5 billion a year for NFL and NBA rights alone. If their subscriber base continues to shrink at the current rate, their revenue will be down 25% in 3 years. They figure out other revenue channels, AND cut costs. Make no mistake ESPN is slowly dying.

Eventually the NBA and NFL will handle their own broadcasts and reap the ad revenue for themselves. 10 year process, but it's inevitable.

If Zach Lowe goes elsewhere I might not look at espn.com except to check on my fantasy team until draft time.

gesa2 wrote:If Zach Lowe goes elsewhere I might not look at espn.com except to check on my fantasy team until draft time.

I use the box scores out of habit. I could break that habit. I'll bet there are others likewise barely plugged in to ESPN.

That's sad. Grantland was by far my favorite sports writing site on the Web. (Not that I know of any similar sites.) I just pray ESPN keeps churning out 30 for 30s.