Layoffs and financial desperation signal the new normal in sports media could be ugly

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It’s still going to be a while before the NBA and the NHL are back on our TVs (and a lot longer than that before they’re back in our arenas), but here’s how you know a sense of normality is beginning to return to the world of sports: After months of playing nice during the pandemic-induced pause, frenemies TSN and Sportsnet are back to their hardball tactics.

On Friday, Sportsnet announced it had snatched popular play-by-play man Chris Cuthbert away from its archrival, and that he would be on air whenever its hockey broadcasts start up again. Twisting the knife, the network’s official news release put these words in the mouth of its new employee: “Sportsnet owns the No. 1 sports property in the country, and I’ve always felt there is something special about broadcasting hockey games on Saturday nights.”

If that chest-thumping makes you nostalgic for the long-ago days of, say, early March, hold on to that feeling. Because it may be the only thing that remains. Sports media may be in the midst of a blindsiding and it just doesn’t know it yet.

The news about Cuthbert came a few days after the data bureau Media Technology Monitor released a poll of Canadians suggesting subscriptions to sports-focused streaming services in Canada such as TSN GO, Sportsnet NOW and DAZN had fallen by 57 per cent since March, to 6 per cent of respondents from 14 per cent.

It also came as word was breaking that The Athletic, a much-hyped sports-news website that launched a subscription-only business model in 2017, was permanently laying off about 8 per cent of its staff, 46 people, and instituting a companywide pay cut of at least 10 per cent until the end of the year.

The Athletic is admired among sports hacks for giving them a lifeline after many newspapers began cutting back on coverage. It is also known for its very Silicon Valley-style hubris. In an October, 2017 interview with The New York Times, co-founder and chief executive officer Alex Mather said he looked forward to local papers “continuously bleed[ing] until we are the last ones standing,” adding the company’s plan was to “suck [local papers] dry of their best talent at every moment. We will make business extremely difficult for them.”

He subsequently apologized, but even so his pride may have been misplaced. Backed by hundreds of millions of venture-capital dollars, The Athletic expanded furiously over the past few years, growing to an estimated 430 writers across North America and Britain, where it launched last year by hiring away dozens of soccer scribes from papers such as The Telegraph, The Times and The Guardian.

And it began to score some impressive journalistic triumphs, including the scoop about the Houston Astros sign-stealing scandal. Here in Canada, senior writer Dan Robson won the National Newspaper Award for a collection of empathetic features about former NHL players.

When the pandemic hit, even as subscriptions stalled, those writers kept churning out stuff. Last Monday, as protests against anti-Black police brutality mushroomed across the United States, nine Black writers and editors offered up firsthand accounts of living with racism in the U.S.

By the end of the week, two of them were among those laid off.

The Athletic is privately held, so it’s impossible to know its real financial picture, but even going on the numbers released by the company suggest a business model that was still seeking a profit before the downturn. Last summer, the company told Bloomberg it had 600,000 subscribers, with an average revenue for every user of US$64. Even if it added another 200,000 subscriptions since then – which seems a tall order – a headcount of 575 would have pushed its labour costs (never mind travel, capital costs, marketing etc.) significantly into the red break-even.

But The Athletic isn’t the only disruptor that’s in financial trouble after being disrupted by a virus. Last week, word leaked out that DAZN, the global sports-streaming service backed by billionaire Leonard Blavatnik, is looking to sell Goal.com, its soccer news website, for US$150-million.

DAZN has spent billions in an attempt to displace incumbents – it snatched up the NFL and English Premier League in Canada, hitting both Bell Media’s TSN and Rogers’s Sportsnet – but its primary effect may have been on rights costs. As viewers have moved to on-demand viewing for scripted TV, the prices paid by broadcasters for sports, which are seen as PVR-proof, have skyrocketed. Disruptors such as Amazon and DAZN entering the fray (with Apple signalling it may be next) have pushed rights fees even higher.

Some have wondered when consumers would decide they’d had enough and find something else to pass the time.

Maybe we’ve hit that point. DAZN, which doesn’t have as deep pockets as others, seems to be in some trouble. Last fall, it tried to raise US$500-million, then abandoned the effort. In April, according to the Financial Times, its CEO sent a memo to staff describing the pandemic as “the biggest disaster to hit the sports world in 75 years and the biggest challenge our business has ever faced.”

For months now, industry leaders have talked confidently about pent-up demand, insisting that, when sports come back, desperate audiences will flock to the games – or at least the broadcasts. Certainly, as record ratings for NASCAR, the German soccer league Bundesliga and a handful of charity golf matches have shown over the past few weeks, fans are hungry.

But what if it turns out that cooped-up and desperate people aren’t the best test market, that in fact a significant slice of the old audience has discovered other things to do with their lives during the planetwide interregnum, whether that’s feeding their new sourdough starters or, say, protesting for racial equality.

Then what?

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