Is ESPN’s Overspending Hurting Disney’s Bottom Line?

When NBC, CBS, and Fox started forming their own sports networks, ESPN re-upped on most of their sports properties and purchased new ones, almost always at a higher rate. They also built new SportsCenter studios at a cost of $125M, a new TV and radio suite in Miami’s Clevelander, and launched the SEC Network at a still-undisclosed cost. They also gave Keith Olbermann his own show, and hired Jason Whitlock and Nate Silver to run their own vanity sites.

But in May, Bloomberg reported that Disney’s media networks division saw a 2% decrease in income, even as ABC grew by 90%. According to Bloomberg, “Disney blamed higher programming and production costs at ESPN, which pays billions for rights to air live sporting events.” And according to The Big Lead, an internal memo was sent out detailing how salaries were impacting production costs.

So far, ESPN has let go Bobby Knight, Lou Holtz, and Bram Weinstein. They’ve also cut NFL analyst Mark Schlereth’s deal in half, and this week backed out of a previously-announced plan to move “Mike & Mike” to New York. The big news this year was Bill Simmons being cut, and Whitlock was unceremoniously removed from his website. And with Olbermann and Silver’s contracts coming up, there’s even speculation they may not be renewed. The feeling in Bristol is that ESPN head John Skipper is no longer in control of a network that’s about to start paying $1B a year for the NBA.

Perhaps this is a bad time to mention that Fox Sports 1 and NBCSN each have a show – “Garbage Time” and “Men In Blazers,” respectively – that are produced in a closet. No, seriously: they’re shot in the same closet at Embassy Row.

Read more at The Big Lead.

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