Report: Revenue, Politics Behind ESPN's Talent Trimming

Keith Olbermann-Gone

UPDATE 7/16/15 11:40 AM:  ESPN Radio's Colin Cowherd is jumping to Fox Radio Sports.

Earlier Posting...

Keith Olbermann's New York-based show was expensive, costing about $10 million a year to produce.

And yet, THR reports ESPN president John Skipper was willing to renew Olbermann if the host tempered his fiery commentaries when it came to NFL commissioner Roger Goodell (Olbermann called for his ouster for his handling of domestic violence issues), indicted outgoing FIFA chief Sepp Blatter and MLB commissioner Rob Manfred. (ESPN denies Olbermann was asked to limit his opinions.)

ESPN has been in cost-cutting mode for a few years, the result of a companywide review mandated by Disney CEO Robert Iger.

John Skipper-The Man

In 2013, ESPN cut 400 of its 6,500 employees, shuttered its 3D network and closed regional offices. In the most recent six-month period, Disney's media networks segment housing ESPN showed slightly declining operating income while the other four segments rose. Cable was the culprit, dropping 6 percent to $3.05 billion while broadcast shot up 61 percent to $542 million. Iger specifically blamed rising ESPN costs.

Outgoing Disney CFO Jay Rasulo attributed second-quarter declines to the College Football Playoff, an NFL Wild Card game and the SEC Network. But he said the company expects "relatively flat programming and production costs in the second half of the year" for a "full-year outlook [that] is unchanged."

Colin Cowherd-Gone

Dropping some network stars won't make a sizeable dent in ESPN's overall bottom line, but, according to The Hollywood Reporter, if executives are jettisoning talent to rein in expenses (and avoid uncomfortable calls from league partners), analysts suggest it would be in keeping with Disney's corpo­rate posture.

Adds analyst Steve Birenberg: "Seems like they pinch pennies more often. Hard to complain with the results." Disney stock, in fact, is up 20 percent this year and up 150 percent in the past three years, far outpacing rivals.

Contracts for some of ESPN's other high-profile personalities are coming up for renewal.