The Fall of ESPN: Part 72

A case study in decreasing leverage

Author

Ahmed Saeed
January 18, 2024

Welcome to Wednesday Thursday Bites, folks. Apologies for being a day late this week.

We’re covering a seemingly benign story this week. But it’s a perfect example of individuals having the leverage they need in order to say whatever the hell they want.

TL;DR INDEX CARD

1. Pat McAfee called out an ESPN executive by name for trying to sabotage his show

2. The situation perfectly sums up ESPN losing leverage over time due to its legacy media status

3. It’s also indicative of a strategy that attempts to turn “digital” assets into successful linear TV stories; which usually doesn’t go well (i.e - Lilly Singh, This American Life on Showtime).

McAfee and ESPN: 3 Questions

Last week, Pat McAfee called out Norby Williamson for trying to diminish the show by leaking internal ratings. McAfee also called him a rat, a sentiment that was validated by others who had previously worked with him.

Why did Pat McAfee do what he did?

  1. Leverage: Pat has 2.5m subscribers to his YouTube channel. Those are his independent viewers, all earned without ESPN’s help.

  2. He’s an ESPN central figure: He signed a 5 year/$85m licensing deal with ESPN. With complete control over his own show.

  3. Relevance: He brings a much needed younger audience to ESPN, which means gambling dollars, ever since they made the deal with Penn Gaming

  4. Final Answer? They need him more than he needs them. We all but saw that in ESPN’s response saying they were handling it internally.

Why is ESPN losing its leverage?

  1. Declining Revenue Stream: From 2022-2023, revenue down by 6% and profit is down by almost a third

  2. Decline of Cable: # of households that have a cable connection is ~46%, down from 73% in 2017

  3. New competition: New mediums have been a great thing for sports commentary overall, but not great for the sports TV business. For every show on FS1 or ESPN, there’s an equally good podcast/YouTube channel.

What are 2 moves ESPN can make NOW?

  1. Invest in digital: We’re talking an absolute total shift into digital. They’re doing that now…we think.

  2. Find a whale of a sugar daddy: ESPN is looking for a deep pocketed partner to carry it through the rocky waters ahead. Looks like the NFL is coming to save the day.

What AI Made This Week

Sick Fits by Ahmed

This is Luka Sabbat. An established fit king at the age of 26.

Look at this Canadian Tuxedo with a relaxed fit jean.

The 90’s look that much better now.

Side note: The outfit is from GUESS! …..GUESS! DO YOU REMEMBER GUESS? He’s singlehandedly carrying the brand on his back in this photo.

Have a great week!

Ahmed and Peter

Join the conversation

or to participate.