ESPN's Business Empire Profiled As Company Addresses New Market Challenges
Some critics "sneer" at ESPN's "boastful tagline -- 'The Worldwide Leader in Sports' -- but it is unquestionably apt," according to Derek Thompson of THE ATLANTIC. ESPN, with an estimated value between $40-60B, is "at least 20 times bigger than the New York Times Company, or five times bigger than News Corp." The company as a single asset "could be worth as much as all the other parts of its majority owner, the Walt Disney Company, combined," and is "likely the most valuable media property" in the U.S. ESPN Senior VP/Research & Analytics Artie Bulgrin said, "Other networks need to create hits. We don’t. We are a destination network, not a network with destination programming. People tune in to ESPN without even knowing what’s on." Thompson writes ESPN "seems to only grow stronger from year to year." The answer to why no one has "found a way to bring it down, even incrementally ... lies partly in a decision made nearly a decade ago." ESPN execs said that ratings in '05 had "declined as the network wandered into the wilderness of sports esoterica." ESPN President John Skipper said, "We had strayed to food eating and gaming and salsa and horse racing and figure skating, and it just didn’t perform for us." His plan to "restore the network’s glory was so simple, it could have fit on a napkin." Skipper: "I had this quadrant with two axes: young versus old, and male versus dual audience." Skipper "pushed the programming to the upper-left quadrant (young and male) with an emphasis on live sports." He said, "We're not looking for niche audiences." Bulgrin said once the net put this strategy in place, ratings "started to change rather dramatically" (THE ATLANTIC, 9/'13 issue). Thompson also presented, with permission from ESPN Research+Analytics, a key Powerpoint presentation on America's favorite TV channels (THEATLANTIC.com, 8/15).
READY FOR THE CHALLENGE? Thompson in an online video said ESPN "isn't just the biggest name in sports, it might be the biggest media brand in the world. But ESPN's dominance isn't inevitable. It could end." Thompson laid out his "5 Things That Could Kill ESPN" with the first thing being FS1, which has a "portfolio of sports rights that rivals even ESPN." FS1 "could be the single greatest head-to-head threat that ESPN has ever seen." The next threat is the Internet, because "if the web is the future of media, then the web cannot be an ESPN monopoly." There are "simply too many national sports sites that compete on its turf." The "threats to the cable bundle" and "cost of sports programming" were the next issues. Thompson said by some estimates, "sports now accounts for half the total cost of TV programming." So if sports costs keep rising and median incomes hold steady, "there could come a breaking point where families could no longer afford to buy the entire cable bundle." The final threat is "ESPN itself, not just its role in driving up the cost of sports, but the broader threat that any company this dominant and valuable can get consumed by its own success" (THEATLANTIC.com, 8/14).