That Capital-Labor Ratio

A long standing meme in these endeavors, both quant and macro, is that capital is constraining vis-a-vis labor. You can't lay off your capital; you have to pay for it, no matter what. So long as output remains steady, or better increases, going all in on capital makes sense. But it doesn't always work. This is especially true if you overpay for that capital:

Last year, the network's new nine-year agreement with the NBA to televise pro basketball games took effect. The reported cost to ESPN: somewhere around $1.5 billion per year, a massive increase over the previous deal. That's on top of deals the network already had with the NFL ($1.9 billion annually), various NCAA conferences and the College Football Playoff (well over $1 billion), and Major League Baseball ($700 million).

All of those contracts aren't the usual kind of capital, but they really are. So, having lost tons of subscribers (and the ESPN set have the advantage of being in the default delivery for most services).

[C]able and satellite companies including Comcast and Time Warner Cable say they have to do something to keep cash-strapped customers from cutting the cord.
...
In order to keep costs down, it won't have ... ESPN, ESPN2...

What kind of economy do we have if the default cable bill is too much for so many folks? The canary just died.

So, in order to pay for all that capital, ESPN is chopping up to 100 heads. Is that anywhere near enough to finance all those $$$ billion contracts? Not even close. Most, from what's been published so far, are regional/specific sports reporters. The only two general faces so far are Ed Werder and Jay Crawford. The latter has always been the most intelligent presence on the network. Figures.