Sitting in his office last September, Mr. Skipper, then ESPN’s president, lit into Ms. Hill, according to people familiar with the meeting. If I punish you, he told her, I’d open us up to protests and come off as racist. If I do nothing, that will fuel a narrative among conservatives—and a faction within ESPN—that the network had become too liberal.
Mr. Skipper chose to spare Ms. Hill. Mr. Trump weighed in on Twitter: “ESPN is paying a really big price for its politics (and bad programming). People are dumping it in RECORD numbers.”
The president’s tweet was hyperbolic, but it tapped into real anxiety at ESPN. What was the way forward for a company shaken to its foundations by the cord-cutting revolution?
Executives at the sports-media giant wanted to seek out new audiences by spicing up shows with opinionated analysis and debate, including on SportsCenter, its struggling news and highlights franchise.
But the amount and intensity of political expression generated sharp internal disagreements over whether ESPN was appropriately taking part in the broader national conversation, or whether top executives were encouraging a divisive company culture and giving too much leeway to hosts to promote left-leaning views, both on air and on social media.
Well before Ms. Hill’s tweet controversy, network icon Bob Ley had approached Mr. Skipper to say “there was a problem with balance internally,” people familiar with the matter said. Reached for comment, Mr. Ley said Mr. Skipper “was always extremely receptive.”
Linda Cohn, one of ESPN’s most prominent female anchors, in April 2017 gave a radio interview opining that ESPN’s politics were pushing away viewers and the network had overpaid for NBA rights. Mr. Skipper called to berate her on both counts, people familiar with the call said.
Why ESPN found itself torn up by the nation’s partisan politics traces back to its fundamental business challenge. Its status as cable TV’s most expensive channel had become a liability. As consumers grew fed up with their monthly cable prices, big cable distributors began offering discounted packages that didn’t include the network. Many consumers opted for those offers, while others cut the cord entirely, leading ESPN to shed 16 million subscribers over seven years.
At the same time, costs have ballooned, especially for vital live sports rights. Average annual payments tied to ESPN’s four biggest, long-term rights deals have more than doubled since 2013 to $4.7 billion. After years of growth, ESPN’s profit declined in the fiscal year that ended in September 2017, people familiar with its finances said. Declines have continued for the two ensuing quarters. ESPN has laid off some 600 employees over the past several years, including well-known hosts, though it has hired in areas such as technology and data.
ESPN’s relationship with majority-owner Walt Disney Co. grew tense as the once reliable profit engine turned into a public headache, people close to the situation said. A recent management shake-up gave Disney a chance to exert more control. Mr. Skipper departed suddenly in December, citing a substance-abuse issue. He later said someone from whom he bought cocaine had tried to extort him.
Disney Chief Executive Bob Iger installed as his replacement James Pitaro, Disney’s former consumer products and digital chief. Mr. Pitaro has promised to expand ESPN’s audience by targeting younger and casual fans, including with a new streaming service launched last month. He believes ESPN leaned too much into politics and that has influenced how the company was perceived, a person close to ESPN said. He has encouraged its programs to return to news and highlights and move away from opinionated commentary.
Mr. Pitaro has said that despite the political debates roiling the network last year, total day ratings were up 1% in 2017 from the previous year, in a largely bleak cable-TV landscape.
ESPN has struck new deals with some cable companies ensuring it gets a share of the monthly bills paid by at least 85% of their subscribers, regardless of how many sign up for packages that include ESPN, people familiar with the terms said. And it has added back 2.4 million subscribers thanks to growth in the past few years from new streaming cable TV services such as Hulu and Sling TV.
An ESPN spokesperson said the company’s momentum is strong.
Several network employees said the company has turned a corner. “When you know that there are dark days coming, it wears on folks collectively,” said ESPN’s late-night SportsCenter anchor Scott Van Pelt, about morale in the past during rounds of layoffs. But more recently, under Mr. Pitaro, “there is a sense that those days are in the rearview,” he said.
Others are jaded after budget cuts and job losses, according to interviews with current and former staffers. “I think the morale there is probably as bad as I’ve seen it in my 22-year tenure,” said Jeannine Edwards, a longtime on-air reporter who retired in December.
Other workplace culture issues have surfaced. Some female staffers were aghast when the network launched a show last fall with Barstool Sports, even after some prominent hosts privately expressed concerns to executives that the outlet’s content was sexist and offensive, according to people familiar with the conversations. ESPN canceled the program after the outcry became public.
More recently, a producer filed a human resources complaint that ESPN wasn’t doing enough to promote women and minorities in production, and the network has interviewed several people who work on SportsCenter, according to people familiar with the situation. ESPN declined to comment on the investigation.
Turmoil in the sports powerhouse’s business traces back to a spring day in 2014. Disney had invited about 100 analysts and investors to ESPN’s headquarters in Bristol, Conn., to hobnob with talent including tennis legend John McEnroe and show off ESPN’s new, $150-million-plus production facility.
In an unusual move, Disney gave long-term financial guidance for its cable networks division, largely powered by ESPN. It was rosy. ESPN’s research department presented data arguing cord-cutting was unlikely to become widespread, according to attendees.
“They were flat-earthers,” said one former ESPN executive.
At the same time, ESPN was spending aggressively. The company agreed to triple the fees it would pay the NBA, which it believes is growing in popularity. On the talent side, Mr. Skipper closely managed negotiations, desiring to beat back rivals like Fox Sports 1 and NBC Sports. Agents, former ESPN executives and hosts said that led him to overpay for several on-air personalities.
By 2015, it became clear the research staff was off base, as ESPN’s subscriber losses accelerated beyond internal projections. That August, Mr. Iger lowered the company’s earlier financial guidance, causing a stock selloff that lopped more than $20 billion off Disney’s market value that week.
Mr. Iger expressed reservations to Mr. Skipper about ESPN’s programming. SportsCenter was flooding the airwaves with many editions and he said it wasn’t distinguishing itself, a person familiar with the conversation said.
ESPN and Disney’s finance teams began to quarrel over budgets as the network was told to find cuts, people familiar with the matter said.
ESPN shaved spending, including by producing games remotely without announcers on site, but changing the culture was challenging. In 2015 the network spent lavishly to beef up its “SportsCenter on the Road” segments, including by pouring over $2 million into programming surrounding the Floyd Mayweather-Manny Pacquiao boxing match, well above initial projections internally, people familiar with the situation said.
For some staffers that became a symbol of excess. Rob King, the executive in charge of SportsCenter at the time, appointed a senior producer to monitor budgets closely after the episode, the people said. A person close to ESPN disputed that spending on the fight overshot internal projections.
Some current and former employees said bloated contracts for talent weighed the company down and led to layoffs. ESPN is still paying many hosts, including former NFL reporter Ed Werder, who were on multiyear contracts when they were laid off more than a year ago.
A new morning talk show that launched last month, “Get Up,” costs far more than its predecessor, a SportsCenter morning edition, and is underperforming it in ratings. Payments to the show’s talent total some $15 million a year, with co-host Mike Greenberg making $6.5 million, people familiar with the costs said. Midlevel SportsCenter hosts tend to earn less than $500,000, one agent said, with better-known ones making up to $1 million and stars landing multimillion-dollar deals.
Mr. Pitaro told reporters in May that ESPN is monitoring the show daily, “trying to identify what’s working and what’s not.” He said the show’s ratings are up since its launch.
There is broad agreement within ESPN that covering sports news means sometimes tackling hot topics like politics and race. The internal debate centered on the tonnage of such coverage, conduct on social media and whether ESPN as a company should take political stances.
Mr. Skipper sought to promote progressive social values, but often his moves came off as overtly political, staffers said. Under Mr. Skipper, ESPN awarded a prestigious “ESPY” award for courage to Michael Sam, the first openly gay athlete drafted into the NFL, and another to Caitlyn Jenner for coming out as a transgender woman.
When Mr. Trump disparaged Mexican immigrants during his candidacy, ESPN shifted a charity golf tournament from Trump National Golf Club to a different venue, a move ESPN’s public editor at the time said seemed “political.”
Conservative ESPN staffers grew frustrated by increased political commentary, including from ESPN executives during the presidential election, and worried about #BoycottESPN hashtags cropping up on Twitter. “Our viewers turned to us for sports,” said Jay Crawford, a longtime SportsCenter host who was laid off a year ago. “Realizing there’s never been a time in my lifetime where our country has been more divided, I saw no value in adding to that division.”
Mark Shapiro, who helped pioneer debate shows at ESPN and is now co-president of media conglomerate WME-IMG, said, “there was too much emphasis on talking heads and fiery opinions and less on breaking news and analysis.”