I think people are watching TV just as much these days, but people aren't watching cable TV like they used to. Few of my friends have cable, and even the ones that do don't watch it all that much. We all used to turn on ESPN as background noise when doing other things.
Now, it's Netflix, or Hulu or Spotify or something. I only watch my teams through apps and can't be bothered to watch other sporting events because I just don't care and those don't affect me. I've tuned out sports and teams that aren't directly in my realm pretty much. I don't think people care about stars anymore to be honest (except in the NBA), I think people only care about their teams and use the wealth of options to watch their teams. 20 years ago if you wanted info on your team you had to hope they would be discussed on ESPN or something. Now you can get 10 blogs on your team in a minute. Why bother watching ESPN to hear them discuss LeBron's press conference or Tom Brady? This is happening in politics, too, in a sense - people just find the networks and websites that feature topics they like, and stay on those.
Sports is becoming more and more regional in my opinion, more than ever, and that's part of the reason people just don't give a crap about ESPN.