Sports TV News
What Is In ESPN’s Future?
If you imagine the world of traditional television as a fortress on a mountaintop, one whose walls are crumbling due to heavy fire from players like Netflix NFLX 4.47% and HBO and Amazon Prime, then the seemingly impregnable tower at the center of the fortress would have to be ESPN. Why? Because the Disney-owned channel has the one thing that has managed to maintain its value while everything else gets completely obliterated: Namely, exclusive rights to a world of sports content. But is that enough—and if so, for how long?
You can tell that this kind of concern is weighing on the minds of Disney DIS -9.72% investors, because the stock dropped by close to 10% following the release of the company’s quarterly financial report, despite the fact that the overall numbers for the entertainment conglomerate were pretty good. Almost every questionon the earnings conference call was about ESPN and the ongoing loss of both subscribers and profits.
In a nutshell, the big fear is that the network’s lucrative stranglehold on sports is disintegrating, pulled apart by a combination of cord cutting, streaming via digital services and competitive pressures from all sides. There have already been rumors of cost-cutting and the channel has shed a number of high-profile (and expensive) personalities such as Grantland founder Bill Simmons, now at HBO.
Disney CEO Bob Iger spent much of his time on the earnings call talking about ESPN, and about how he doesn’t see much impact from cord cutting for at least the next five years or so—an estimate that at least some analysts think is absurdly optimistic. Iger also reiterated comments he has made in the past to the effect that if ESPN wanted to, it could come up with its own over-the-top service similar to HBO Now, and that a substantial number of subscribers would likely pay for it.
The Disney CEO also noted that 83% of all multichannel households turned to ESPN in the first quarter of this year, and that 96% of all sports programming is watched live, which he called “particularly valuable in today’s rapidly changing advertising marketplace.” And here are some media-industry analysts who agree with Iger that the existing “moat” around ESPN’s content is still pretty wide.
Ben Thompson, an analyst who writes the subscription newsletter Stratechery, said in a recent update that “ESPN is far better positioned for a world where they must go over the top to consumers than people give them credit for.” Even if ESPN was to charge more than $30 a month per subscriber—as a recent analysis said they would, in order to maintain their existing revenue — Thompson called that “a very realistic target.”
Not everyone is quite as sanguine, however. Analyst Eric Jackson said the channel might be able to engineer a transition to an over-the-top digital version of its existing service, but there are still some large question marks associated with that transition. As he put it:
“What if OTT and any new digital format is one-tenth as profitable as the Euro-socialist cable bundle? If you trade analog dollars for digital dimes, how do you wave your hands and chance basic economics?”
One of the things that makes ESPN very different from other streaming success stories such as HBO and Netflix is that the sports broadcaster’s content has an extremely short half-life. Netflix may not mind paying hundreds of millions of dollars for a TV show because it knows it can rebroadcast and license that content forever, but ESPN’s library consists of things that only have value for a few hours.
On the one hand, this short life-span is the channel’s biggest strength: When a major sporting event is taking place, people want to see it right away, and they are willing to pay handsomely for that ability. But if competitive pressure continues to increase, that life-span could become a serious weakness.
One potential source of competition for ESPN, ironically, is the very sports leagues and franchises that it relies on for its livelihood. Major League Baseball’s internal streaming and mobile technology operation, known as BAM, has quietly become a powerhouse in that part of the market, and now it has signed a deal to do all of the broadcasting for the NHL as well. Thompson argues that most leagues will opt for the broader reach of ESPN rather than go direct, but it’s unclear how many will feel that way, or for how long.
ESPN has signed expensive long-term contracts with most of the leagues it deals with, but if more and more of them start to pursue their own over-the-top deals via providers like BAM or even Yahoo and other outlets, then ESPN’s iron grip on live sports could continue to weaken.
If you’re an investor in Disney because of its ESPN stake, these are some of the questions you probably want to ask yourself: How much value do those existing contracts have as the TV market continues to implode? What could potential competitors, including the leagues themselves, do to ESPN’s margins? And if it decides to (or is compelled to) offer its own over-the-top service, how many people would likely subscribe to it directly, and how much would they be willing to pay?
Credit to Fortune who originally published this article
Jason Barrett is the owner and operator of Barrett Sports Media. Prior to launching BSM he served as a sports radio programmer, launching brands such as 95.7 The Game in San Francisco and 101 ESPN in St. Louis. He has also produced national shows for ESPN Radio including GameNight and the Dan Patrick Show. You can find him on Twitter @SportsRadioPD or reach him by email at JBarrett@sportsradiopd.com.
Sports TV News
Amazon Sports: We Like Smaller Leagues, But Major Leagues Will Be Focus
“When fans are already on our service, we can use that to create culture and content in a way we couldn’t otherwise. It’s a great microphone to have as a service.”
Amazon continues to make its claim in live sports rights, but it’s also gotten into original sports storytelling as well.
The streaming giant has found success with documentary-style shows like Good Rivals, which chronicles the rivalry between the U.S. and Mexico in soccer, as well as Coach Prime, which has been following hall of famer Deion Sanders on his collegiate coaching journey. Both of which have garnered Sports Emmy nominations.
Matt Newman, Amazon’s Head of Original Sports Content, said at the sports and entertainment event 4se in New York City that it’s amazing to be able to make compelling content outside of the big five leagues.
“Naturally the majority of our volume will be in the bigger, major sports, but we’d love the opportunity to kind of tell these stories you may not have heard of,” he said. Newman was promoting an upcoming series on the Professional Bull Riders called The Ride. “And these new stories, these characters will give us access and give us a chance to tell a story in a way that hasn’t been done before.”
Amazon is trying to compete with the likes of Netflix, which have created similarly successful programs like Formula 1 Drive to Survive and Full Swing with the PGA Tour.
But Newman reiterated that live sports will always be the main focus in terms of content.
“We are investing in our live rights. We have a great deal with Thursday Night Football, we just announced a renewal of WNBA live rights,” he said. “When fans are already on our service, we can use that to create culture and content in a way we couldn’t otherwise. It’s a great microphone to have as a service.”
Jordan Bondurant is a features reporter for Barrett Sports Media. He’s a multimedia journalist and communicator who works at the Virginia State Corporation Commission in Richmond. Jordan also contributes occasional coverage of the Washington Capitals for the blog NoVa Caps. His prior media experiences include working for the Richmond Times-Dispatch, the Danville Register & Bee, Virginia Lawyers Weekly, WRIC-TV 8News and Audacy Richmond. He can be reached by email at firstname.lastname@example.org or follow him on Twitter @J__Bondurant.
Sports TV News
Charles Barkley ‘Was so Mad’ at ESPN Coverage of LeBron James
“We all love LeBron, [but] he didn’t say he was retired yet. It should’ve been all about the Denver Nuggets.”
When the Denver Nuggets advanced to the NBA Finals for the first time in the 47-year history of the franchise, ESPN showed the team’s celebration for all of four seconds. It then quickly switched to a shot of LeBron James, stoic but obviously disappointed, walking through the tunnel back to the Los Angeles Lakers locker room.
Tuesday on ESPN’s First Take, JJ Redick criticized the network’s NBA coverage for highlighting larger markets and a small faction of players considered to be “superstars.” There’s no way to tell if Charles Barkley was watching, but Redick’s point is one he agreed with.
That night on Inside the NBA, Barkley said he was annoyed with the amount of attention put on LeBron James after the game. He wanted to see the reactions of Nuggets stars Nikola Jokić, Jamal Murray and head coach Michael Malone to making the NBA Finals. Instead, he and other viewers were inundated with more content centered around the Los Angeles Lakers.
“I was so mad this morning I actually turned the TV off,” Barkley said last night on Inside the NBA, “because the Denver Nuggets sweep and get to the Finals for the first time. We all love LeBron, [but] he didn’t say he was retired yet. It should’ve been all about the Denver Nuggets.”
James, for the record, did not even say that he was seriously considering retiring. In a post-game press conference following the Lakers’ elimination, he said he “had a lot to think about” in the offseason.
The Walt Disney Company has reported its most-watched NBA playoffs on ESPN platforms in the last 11 years, according to data provided by Nielsen Media Research. The games have averaged approximately 5.6 million viewers, a 9% increase from the year prior. Moreover, Game 4 between the Nuggets and Lakers peaked at around 11.5 million viewers from the 11 to 11:15 p.m. EST quarter hour window, and averaged 8.2 million over the duration of the contest.
Sports TV News
ESPN Layoffs Resume, NFL & NBA Talent Likely To See Biggest Cuts
“The company is beginning its latest phase of layoffs this week with Vice President of Research, Insights and Analytics Barry Blyn receiving a pink slip Wednesday morning.”
ESPN will look to slash $30 million in salary as The Walt Disney Company’s layoffs continue, with a majority of it coming from talent covering the NFL and NBA. The network’s goal is to have the layoffs completed by the end of June according to a report by Front Office Sports.
Through it all, Max Kellerman’s afternoon television show This Just In could be canceled in order to slot Pat McAfee’s show into the daily programming lineup. Kellerman’s show airs from 2 to 3 p.m. EST, meaning more moves could be on the way to hold McAfee’s statement that his show will air immediately following First Take, which concludes at noon.
Employee morale at ESPN’s headquarters in Bristol is reportedly quite low, with people questioning why the company chose to pay McAfee and lay off a litany of its dedicated and longtime staffers.
The company is beginning its latest phase of layoffs this week with Vice President of Research, Insights and Analytics Barry Blyn receiving a pink slip Wednesday morning. More names are surely to follow as The Worldwide Leader looks to do its part to contribute to Disney cutting $5.5 billion in costs. The final round is expected to impact 2,500 employees in different areas of the company.
The company expects to report its own earnings for the first time this November, and sources have stated that the numbers will be impressive. Conducting the layoffs in separate rounds and saving on-air talent for last, however, has certainly played a role in public perception of the moves, and this week’s round will largely impact executives and other personnel behind the scenes.