ESPN Layoffs and Kicking out the Gatekeepers
What should be next for the Jeff Van Gundy's of the world
On Friday June 30th, ESPN laid off a lot of their TV personalities such as Jalen Rose, Suzy Kolber, and Max Kellerman. As a long time NBA fan and Knicks fan, the firing of Jeff Van Gundy (JVG) hit a little differently. While I’m sure JVG will land on his feet and I shouldn’t care too much for someone I don’t personally know, this was a bad decision on multiple levels.
In what has been described as cost cutting, by a billion dollar sports company owned by Disney, (who has had their own financial difficulties in the past few years), this is not too surprising. Big companies that “underperform” have to fire people sometimes. This post isn’t a deep dive into the financial situation of Disney or ESPN, and this is not a critique of capitalism. (A subject I’ve defended.) This is a critique of gatekeepers and how they lead to bad business strategy.
The term gatekeepers can refer to any type of company or organization that is restrictive. The classic example are publishing houses because they very selective in helping new writers get published. Hence why self-publishing or go direct to consumer via the internet is so popular.
ESPN’s management are gatekeepers of a different sort, but they have the power to choose which sportscasters and TV people to put on the air. Jeff Van Gundy had been at ESPN for 16 years and it is fair to estimate his salary at about 5 million. For reference, his longtime TV partners, Mark Jackson and Mike Breen, make about $6 and $7 million, respectively. So you can see why they would fire him and replace him with a lower paid color commentator. This of course ignores his undeniable ability, one of the best to do ever do it, and how much his presence effects NBA ratings, which is probably both hard to measure (even for ESPN), and minimal. Only diehard fans tune into games for the announcers or mute TNT for theirs. (Yes, I’m talking about you Reggie Miller. Who has been at TNT for 17 years [$7 million salary], and has really gotten worse with age. No offense. It’s just former NBA players coast off their reputations without getting better at their jobs in broadcasting.)
While this probably was a business decision and one that I can’t begrudge too much from the outside looking in, it does offer a lesson in how to get the most value out of your work and not be at the whim of a boss who can fire you when times get tough.
In JVG’s case, his firing opens up an opportunity for him to broadcast without ESPN. It has long been said that ESPN does not value their top-line people. In part because you don’t want your stars to command too high salaries. From management’s perspective they don’t want to give up leverage in contract negotiations, but a good business will fairly value their people, treat them with respect, and realize their individual contributions. Treating people like they’re expendable can work at ESPN because what brings most people to their network is the games themselves. But as network sports TV faces more competition from streamers and social media, this will become more of a competitive disadvantage. The business that offers more money, plus a better working environment, will win out in the long run.
This reminds me of the negotiations between the studios and streaming networks against the writer’s and now actor’s union. Their fighting over who gets a bigger slice of the revenue pie. It is these type of negotiations, where greed and a scarcity mindset overwhelms. From a smarter and less emotional perspective, the negotiators should use the Michael Scott method of negotiation: “win-win-win”. No one can exist easily without the other. Netflix or Sony provide the platform and the related structures, like marketing and distribution, for the creatives to make great art. The writers, actors, and directors are truly what make a show or movie work, but good producers and executives can help them steer the ship in a successful commercial and artistic direction. The stories of executives who give ridiculous notes or block great stuff from being made are numerous. Because these stories are more salient and well-known, it gives the false impression that all executives do is get in the way. There is a reason why these large streamers and production companies are run by business people rather than by actors because the myriad skill sets are different, and hard for an actor to have all of them, and the amount of capital needed is beyond even the richest actors.
One of the more ridiculous proposals I heard the studios make is they were negotiating for the right to use the AI image of actors in perpetuity. That type of scarcity mindset shows a lack of respect for what actors do and add to total value. And makes executives look greedy and callous. Competition between streamers is fierce because there are so many, and I understand that executives want to be profitable and please their bosses and shareholders too, but there is a happy medium where revenue is distributed close to fair based on the value everyone brings to the table. This separates good CEOs from average ones.
Technology brings disruption. And the business that can get JVG in front of a microphone for an NBA game will benefit. His audience might not be huge, but it doesn’t need to be for a win-win solution where consumers pay a nominal fee to listen to his commentary during NBA games. It is in part the important people who seek the comfort of traditional gatekeeper jobs at ESPN and the New York Times that are keeping the lights on in diminishing industries. If Mike Breen and Mark Jackson quit out of loyalty and sought another network or media alternative, ESPN would face a small firestorm. They too could be replaced, but then the fear creeps up of who’s next to leave?
To “kick out the gatekeepers” one needs to start new gateless ventures, ways of doing business, and providing value. The new type of NBA announcing, for example, should be welcoming and based on valuing what people bring to the table. The best businesses today offer consumers more of what they want, in the most frictionless way possible. Whoever does this first and then best, will enjoy the fruits of everyone's labor.
Thanks for reading!