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WHAT THE DISNEY/CAP CITIES DEAL MEANS FOR THE SPORTS WORLD
Published August 1, 1995
"There was a time not long ago when the four major sports and the broadcast networks were considered the preeminent players in sports," writes Steve Zipay in NEWSDAY this morning. "That era officially ended Monday." Disney's $19B purchase of Cap Cities/ABC, Zipay writes, "is a ringing affirmation that Fortune 500 companies drive sports and the Big Three in that realm are now Nike, Coca-Cola and Disney." Jeffrey Pollack, Publisher of THE SPORTS BUSINESS DAILY: "Without question, the merger is the most significant deal deal ever to hit sports, in terms of the complete and total integration of entertainment, media and sports. Disney's power in sports is now unavoidable." Zipay notes that Disney/ABC must now be considered a possible bidder 2000 Sydney Games and, "more likely," the 2002 Salt Lake City Games. In addition, ABC could be back in the hunt for baseball, with Disney "saying that the decision [to pull out of The Baseball Network] was one made by the former regime." Zipay: "Imagine offering Disneyland as a site for the All-Star Game or the Super Bowl during negotiations." Sources say Mighty Ducks President Tony Tavares "may emerge as a top executive on Disney's sports side" (NEWSDAY, 8/1). FROM THE MAN HIMSELF: Asked about the merger's influence on sports, Disney Chair Michael Eisner said, "I think entertainment and sports are related anyway. The Disney Company, through some of our Goofy cartoons and stuff, has always been sports oriented. Anything to get people out of the house, and into a movie theater or a sports complex" ("Larry King Live," CNN, 7/31). GRUMPY, SNEEZY, DOPY, DOC ... BOOMER, DAN & KEITH? As part of the deal, Disney assumes Cap Cities' 80% share in ESPN Inc. Asked what kind of synergies he sees coming from the merger, Eisner was quick to mention the global possibilities of ESPN. Eisner: "There's obviously the synergy of putting ESPN and the Disney Channel together around the world. And there are many place in the world, like China, India and other places, that do not want to accept programming that has political content, but they have no problem with sports, and they have no problem with the Disney type of programming. The leverage of those two together, in what used to be third-world countries, or closed countries, is enormous" ("MacNeil/Lehrer," PBS, 7/31). Smith Barney analyst Jill Krutick "sees plenty of opportunities for cross-promotions," including ABC and ESPN-logoed products sold at Disney stores (S.F. CHRONICLE, 8/1). NatWest Securities' Paul Marsh: "Imagine promoting a Disney sports movie like Mighty Ducks on ESPN." In addition, ESPN itself was recently part of a deal to buy out Labatt's communication holdings, including Canada's cable sports channel, The Sports Network (BLOOMBERG/TORONTO STAR, 8/1). The WALL STREET JOURNAL notes another possibility: "a chain of ESPN sports clubs or bars." Eisner said he is already envisioning ways to "grow ESPN and Disney outside the house" (Jefferson & Bannon, WALL STREET JOURNAL, 8/1). The N.Y. TIMES' Bill Carter lists the following possibilities: the combination of ESPN-Disney programming distributed globally; ESPN-branded attractions inside Disney parks; new channels from ABC/ESPN programs for distribution through new cable or phone company-delivered video services (N.Y. TIMES, 8/1). DISNEY AND BASEBALL: In Baltimore, Milton Kent asks, "Could there be a better fit than Major League Baseball, which desperately needs to be marketed properly, and Disney, the masters of manipulation?" (Baltimore SUN, 8/1). Asked if ABC would be interested in baseball, Cap Cities/ABC Chair Thomas Murphy said, "We are interested in anything that would be good for our audience" ("Larry King," CNN, 7/31). In L.A., Daniel Howard Cerone also notes that ABC's decision to get out of baseball could change. One exec from another network sports division: "All bets are off now. ... They're not only broadcasters now, they're the entertainment industry's best marketers and merchandisers. They can go to anybody they want to partner up with and say: 'We can put your products in the Disney stores nationwide. We can merchandise them in our amusement parks" (L.A. TIMES, 8/1). DISNEY AND FOOTBALL: Asked if Disney would bring an NFL franchise to Los Angeles, Eisner said, "We have talked to several people about it, but if the Disney Company would be involved it would be in Anaheim or Orange County" ("Larry King Live," CNN, 7/31). In Orange County, Andre Mouchard writes that buying a network "increases the odds that Disney will buy a pro football team" (ORANGE COUNTY REGISTER, 8/1). L.A. STORY: One of the few conflicts to be resolved from the merger is the fact that Disney owns L.A.'s KCAL-TV while Cap Cities owns KABC-TV. FCC regulations prohibit ownership of two stations in one market. For now, KCAL will be placed in a trust, but Eisner expressed doubt that Disney "would be able to hang onto it." KCAL owns the rights to the Mighty Ducks, but Disney may opt to show the team's games on KABC or ESPN. In addition, the Angels, currently on KTLA, "may also find a new home as a result of the merger." Disney is in the process of acquiring a 25% stake in the MLB team (Gene Braxton, L.A. TIMES, 8/1). SPORTS ON AIR: Cap Cities owns 10 TV stations and 21 radio stations around the country. The Cap Cities stations that hold rights to pro sports teams: WABC-AM (Yankees), KABC-TV (Dodgers), KGO-AM (49ers), WJR-AM (Tigers, Red Wings), WBAP-AM (Stars), WMAL-AM (Capitals) (THE DAILY).