SBD/January 18, 2012/Media

Newsweek Questions Whether ESPN Has Become Too Big For Its Own Good



ESPN takes in average of $4.69 per HH per month in cable-subscriber fees
ESPN is “a network as big as the leagues it covers,” but the net may have “gotten too big for its own good,” according to Nick Summers of NEWSWEEK. As a business, ESPN “thrives because it is playing a different game than the big public-airwaves networks.” NBC and CBS “make money from advertising,” but ESPN “takes in even more from cable-subscriber fees -- an average of $4.69 per household per month.” By comparison, the next “costliest national network, TNT, takes in just $1.16 from about as many homes.” ESPN had a “revenue of $8.5 billion last year,” and has “become the principal cash spigot of the Walt Disney Co., the network’s 80 percent parent.” To “the largest corporation on earth” the net has become “more important than Disney World and Disneyland combined.” ESPN’s costs are “defrayed whenever it passes on surcharges to cable operators.” But as viewers begin to “squawk over rising cable bills, cable operators protest that the sports giant has gotten too pricey and too coercive in its terms.” American Cable Association President & CEO Matt Polka said, “ESPN, through ... sheer muscle, has been able to say to us, ‘You will carry this service on the lowest level subscription you offer, and you will make all of them pay for it.’” Summers notes while government action rides in part on November’s elections, “a more pressing concern to ESPN and cable operators is the risk, in a down economy, that consumers will simply cut the cord.” And they “definitely don’t like the notion of pick-and-choose plans that have been floated.” Summers asks, “Wouldn’t it kind of make sense for fans to pay more, though -- to pay the true costs of sports programming, so that nonfans don’t have to chip in?” ESPN Exec VP & CFO Christine Driessen said, “This notion of trying to appropriately charge the ‘correct’ cost to the consumer -- it’s just not going to work out that way.”

: Summers reports in order for ESPN to “maintain favorable access to athletes, teams, and entire leagues, it is widely accused of downplaying stories that cast sports in a negative light.” Live games may “lead fans to watch ESPN more and more, but they’re seeing less and less of the network they fell in love with.” Today, there is often “excellent journalism to be found in the ESPN empire, from its 'E:60' and 'Outside the Lines' programs -- to documentary fare like '30 for 30.''' ESPN The Magazine distinguishes itself “with investigations, and is a go-to destination for breaking news.” This kind of coverage “is crucial to the network’s reputation,” but viewers “do expect ESPN to bring them the truth about the athletes and coaches in whom they invest so much.” ESPN has “always kept an awkward balance, somewhat unique in broadcasting, in that it covers sports leagues journalistically at the same time it pays them billions of dollars for the rights to broadcast their games.” Similarly, the net “covers athletes as news figures at the same time it benefits from their promotion.” Summers writes this conflict of interest “can result in gratingly off-key programming choices.” If ESPN has “taught us one thing about broadcasting sports, it’s that storylines matter: matchups are more riveting when there are heroes and villains.” Having played the “underdog for the first half of its corporate lifetime, ESPN has, to many, become the dynasty it feels good to root against” (NEWSWEEK, 1/16 issue).
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