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What Happens When ESPN Overpays For The NFL?

Jason Barrett

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This week will tell the story about whether Big Media’s summer swoon in stock prices was a temporary blip or the beginning of a long-term secular decline for the space similar to what we saw in newspapers starting 15 years ago.

Or – more likely – it will be both.

That means we could be poised for a temporary comeback in these names, while also having the longer term trend now firmly underway as of this summer and ready to play out over the coming years.

With the market rebound in the month of October, a lot of the big media names were finally able to get up off the canvas.

Disney – which will report on Thursday afternoon – shot up 11% for the month, ahead of the the S&P 500 at 8%. Time Warner, reporting Wednesday, was up 8% in October.

Fox did even better at 13% for the month.

Some of the biggest winners for the month though came down the most in the summer. Viacom was up 15% for the month of October, while CBS was up 17% (and reports on Wednesday).

Some of the cable company earnings last week gave hope that consumers are not cancelling their bundles quite as quickly as some of the cynics have worried about.

This week, we’ll hear from the content owners.

Of course, the most interesting report is going to come from Disney. ESPN basically started cutting costs from the moment they let Bill Simmons walk this past May. If you listen to his new podcasts or others discussing the anger between Simmons and ESPN head John Skipper, it’s often described in highly personal tones.

My view is that ESPN execs got the word from Disney on high that costs were way too high relative to subscriber cancellation fears and the expensive sports rights the network had signed up for over most of the next decade.

Ending the Simmons relationship is peanuts in the grand scheme of ESPN annual profits (maybe $6M a year?). But it was the start of a number of layoffs at the network over the summer and the decision to let Olbermann and Cowherd leave.

All those decisions made more sense in light of the August earnings report from Disney. Now, we’ll get their latest on Thursday. But the job cuts have continued at ESPN. 3 – 400 more people from the network were recently let go.

There were some reports after the latest blood-letting from perhaps those who were let go that ESPN had outbid the nearest rival for rights to Monday Night Football by $500 million a year to win it at just under $2 billion a season.

On a recent Netflix earnings call, executives said they had no interest in participating in the bidding on sports rights which they called excessive.

So, if we are living in a sports bubble, should we expect that sports rights will fall back to earth when they next get negotiated in 5 to 7 years? Not necessarily because there are likely to be a whole bunch of new digital bidders around the table when that happens. More competition is generally supportive of the prices paid.

Just a week ago, Yahoo bid $20 million to the NFL for the right to – by some reports – lose $17 million broadcasting a 6:30am PT game from London between the Buffalo Bills and the Jacksonville Jaguars. You can bet that Apple, Amazon, Yahoo, Twitter, and Google are likely to be as interested in the NFL as much as the broadcast networks the next time the NFL decides to put a package of games up for bidding.

So, in this environment, expect more job cuts at these networks. Expect less grandiose sets for SportsCenter. Expect only a hundred reporters covering sports instead of 500.

The decision on Friday to shut down Grantland was probably an easy one for ESPN and Disney. They aren’t here to have an ego war with Bill Simmons to show him up by keeping Grantland afloat. It wasn’t a big traffic driver and it’s 40 – 50 people, so… shut it down.

I’ll miss all the tremendous writing talent and great personalities but – let’s face it – they’ll all find a home and I’ll keep listening. It just was too expensive for ESPN to keep it going.

I would expect the Nate Silver experiment at 538 will end within the next two years as well and he’ll be back to the New York Times or Bloomberg if they make him a more lucrative offer.

The Undefeated might also be tossed aside as well. I’m actually surprised they recently said it was going to go forward. Why? Shovel everyone through ESPN.com or the Magazine. That’s it. Eventually that’s all that will be left around the actual sports.

If Thursday’s Disney results show more subscriber contraction, expect these kinds of moves to happen faster.

Read more at Forbes which is where this article was originally published

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Stephen A. Would Welcome Shannon Sharpe to First Take

“If that included him wanting to come on First Take, the bosses at ESPN know that is something I would support. Not every day, but one of those days every week.”

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Following a report of Shannon Sharpe leaving FOX Sports 1’s Undisputed at the conclusion of the NBA Finals, there may be a new landing spot for him in the future at ESPN on First Take. On Friday’s edition of The Stephen A. Smith Show, a digital podcast live streaming on YouTube, show host and executive producer Stephen A. Smith extended an open invitation to Sharpe to join him at ESPN.

“I don’t know what his plans are. I don’t know what he’s trying to pursue. I don’t know what he’s after, but if Shannon Sharpe needs me, I’m happy to be here for him. And if that included him wanting to come on First Take, the bosses at ESPN know that is something I would support. Not every day, but one of those days every week.”

The decision to publicly voice his support for Sharpe comes a day after incoming ESPN midday host Pat McAfee stated that he hopes Sharpe joins the network, as he feels he has a voice that can contribute to coverage. Sharpe has been working with Skip Bayless on Undisputed since 2016, but reports of tension between the two co-hosts presumably led to his purported exit. Front Office Sports reported that Bayless will have the final say on who replaces Sharpe and sits opposite him each morning.

“I’ve gotten to know Shannon Sharpe a little bit over the last few years,” Smith said. “I genuinely like him and respect him. He is a three-time Super Bowl champion; he is a Hall of Famer; he is one of the greatest tight ends in the history of the National Football League, and I personally think he’s done a hell of a job on television and with his podcast Club Shay Shay.”

Smith implored those listening that he will not speak against Skip Bayless, despite having contrary points of view on most topics. The duo previously worked together at ESPN on First Take for four years and elevated the morning show to new heights, attaining record ratings in sports television. When it was disseminated by the New York Post that Sharpe is leaving FS1, Smith recognized how big of a loss it would be for the network, but is content with the show’s current setup of having different panelists on the show throughout the week. Smith and co-host Molly Qerim are the only constants on the program at the moment on a day-to-day basis.

“I get to handpick who’s on First Take once they’re in-house for ESPN,” Smith said. “I don’t get to bring them from the outside in without the bosses’ okay. We have to be honest – I’m not the boss. That’s Dave Roberts; that’s Jimmy Pitaro; that’s Burke Magnus; that’s those dudes. I answer to them – it’s not the other way around when it comes to all matters pertaining to ESPN, but they know where I stand.”

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Judge Rules Diamond Sports Must Pay MLB Teams in Full

“As with the Padres, MLB will stand ready to make games available to fans if Diamond fails to meet its obligations.”

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A judge has made his ruling has been reached in the caustic bankruptcy trial between Major League Baseball and Diamond Sports Group. Diamond Sports Group must pay the full value of the contracts with the four teams that are involved in the legal proceedings. These teams include the Arizona Diamondbacks, Cleveland Guardians, Minnesota Twins and Texas Rangers.

There was an additional caveat to the final ruling. The judge urged both sides to talk to one another, perhaps realizing the level of contemptuousness evident throughout testimony from both sides in the trial.

“Maybe market forces change terms of deals, but market risk is always there [and] inherent in every contract,” U.S. Bankruptcy Judge Christopher Lopez said in his ruling. “Knowing that I think the contract rate is the reasonable and the right rate, the way that teams are locked in [and] the evidence that’s presented before me, I’m going to find that the fees are the actual necessary cost of preserving the state. The teams can keep the 75% I believe they’ve already received and they should get the [other] 25%.”

Diamond Sports Group now has a decision to make regarding if it will oblige by the ruling and pay the four teams as directed. If not, they will be forced to relinquish the broadcast rights for those teams, just as the entity did for the San Diego Padres earlier this week.

Sources close to the situation have indicated that this represented somewhat of a breaking point between the two sides, and that the hostility will be too much to overcome for future deals. Diamond Sports Group is tasked with renewing rights for 28 teams across the NBA and NHL at the conclusion of next season, in addition to five Major League Baseball teams.

“MLB appreciates the ruling from the Federal Bankruptcy Court in Houston requiring Diamond to pay the full contractual rate to Clubs,” the league said in a statement. “As always, we hope Diamond will continue to broadcast games and meet its contractual obligations to Clubs. As with the Padres, MLB will stand ready to make games available to fans if Diamond fails to meet its obligations.”

Major League Baseball Commissioner Robert D. Manfred Jr. described a meeting he had with Diamond Sports Group’s management where the company threatened bankruptcy – despite having money in liquidity to pay the rights fees – in order to restructure itself and selectively reject contracts. He also divulged that the league will cover at least 80% of the payments the afflicted teams were supposed to receive from Diamond Sports Group, which operates as a subsidiary of Sinclair Broadcast Group. Major League Baseball says it is ready to take over production and dissemination of local broadcasts and prepared for this move in advance by strengthening its media division, including the hire of Billy Chambers as executive vice president of local media.

While Diamond Sports Group is technically a subsidiary of Sinclair Broadcast Group, the role of the latter has been diminished because of the former’s declaration of Chapter 11 bankruptcy. Creditors agreed to trade the debt they owe for equity in Sinclair Broadcast Group, rendering the management structure somewhat ambiguous. The company’s decision to engage in bankruptcy protection will aid in eliminating $8 billion of outstanding debt after Sinclair Broadcast Group acquired the regional sports networks from The Walt Disney Company in 2019 for $10.6 billion. Major League Baseball, in partnership with Liberty Media, bid nearly $9.6 billion for the networks ($3.5 billion in leverage), but ended up falling short. Diamond Sports Group has local broadcast rights for 28 teams across the National Basketball Association and National Hockey League, with all of those deals – along with five among Major League Baseball teams – set to expire at the conclusion of next season.

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Ernie Johnson: Death of Kobe Bryant Solidified Inside the NBA Crew’s Bond

“I’m in the fortunate position [of] getting us from point A to point B to point C with three guys who have been in every conceivable situation in a basketball game.”

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As the Eastern Conference Finals concluded, Inside the NBA signed off for the final time of the 2022-23 season, officially closing the 33rd year of broadcasts led by Ernie Johnson. Kenny “The Jet” Smith joined the show on a full time basis in 1998, and Charles Barkley joined him two years later, creating a trio for the next 20 years.

They were joined by different fourth analysts over the years, including Reggie Miller, Magic Johnson and Chris Webber, but the company made a permanent hire in 2011 by adding Shaquille O’Neal. From that moment on, the four gradually blended into a family and now share a unique chemistry not often seen in television.

“Nobody tries to make themselves the show,” Ernie Johnson told Dan Le Batard on South Week Sessions. “They’ve never tried to make the show about themselves. I’m in the fortunate position getting us from point A to point B to point C with three guys who have been in every conceivable situation in a basketball game.”

Johnson undoubtedly knows his role on the show is to facilitate discussion and position the analysts in the best position possible to share their basketball knowledge gained through their playing years. He is a veteran studio host and broadcaster, contributing to TBS’s Major League Baseball coverage during the offseason, and is able to seamlessly transition between different sports over the course of the year.

“If you try to stray outside your lane and be something you aren’t, then it doesn’t work,” Johnson said. “The fact that we don’t rehearse and the fact that we just let it rip – there you go.”

The feeling is mutual between Johnson and his co-workers that they view each other as family and hold one another in extremely high regard. Le Batard acknowledged how he has heard Barkley talk about Johnson in such a venerated manner, and that he and the others give the impression that they would do anything for Johnson.

Johnson simply replied, “And I would do the same for them. We all would.”

Johnson vividly remembers when Kobe Bryant passed away and the Inside the NBA crew was doing a show from Los Angeles reflecting on his life and legacy. At one point on the broadcast, O’Neal addressed his colleagues and told them that he loves them, realizing that he does not say it enough. It was a heartwarming moment for Johnson, and one that brought their bond to light.

“I think one thing that whole moment of time taught all of us was that you don’t know how long you have,” Johnson said. “It behooves us to make sure that everything’s cool between us – not just between the four of us on the show, but between everybody in your life… If the unthinkable happens, do you want to leave that with, ‘Man I wish I had said this. I wish that silly feud; I could have stepped up and defused it.’… I think it was a pretty brutal reminder of that.”

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