SBD/1/Sports Media

WHAT THE DISNEY/CAP CITIES DEAL MEANS FOR THE SPORTS WORLD

     "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).
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