Group Created with Sketch.
Volume 21 No. 1

Media

In the spring of 2014, ESPN’s top executives sat in a conference room on the Bristol campus and agonized over a key financial decision.

They debated whether to commit $12.6 billion for the rights to the NBA through 2025 — a staggering increase that was nearly three times higher than ESPN had been paying annually.

The network’s top money people — Sean Bratches, who ran sales and marketing, and CFO Christine Driessen — did not like the proposed deal. Along with CTO Chuck Pagano, they wanted to keep the NBA, but warned about cracks that were appearing in ESPN’s subscriber base, which was more than 96 million homes at the time. That subscriber uncertainty made such a huge cost increase needlessly risky, they argued.

Just wait, they said. After all, ESPN still had two years left on its NBA deal. See how the market looks then before making such a big decision.

ESPN President John Skipper, who sat across the table, disagreed. Supported by programming head John Wildhack, digital head John Kosner, and Executive Vice President Marie Donoghue, Skipper warned that NBC and Fox were waiting in the wings to steal ESPN’s NBA package. The price may seem high, but sports rights are worth whatever somebody is willing to pay for them. And he was convinced that both networks would pay as much as ESPN, if not more, if given the chance.

SBJ media writer John Ourand speaks with Executive Editor Abe Madkour and senior writer Bill King about his reporting of the ESPN story.

Skipper’s message was simple and direct: ESPN needed top sports properties like the NBA, especially in an environment where pay television was shedding subscribers. It would be a strategic mistake to allow competitors to get such a premium sports property.

“You have to build a deeper moat,” he often said when discussing competition. In Skipper’s folksy Southern style, that meant keeping ESPN’s enemies at bay. It meant identifying the rights ESPN wanted — the NFL, NBA, MLB, MLS, college sports, tennis — and paying a dollar more than anyone else to get them.

Skipper prevailed and won important buy-in from Disney Chairman and CEO Bob Iger, who also believes that sports rights will hold their value even if the network loses subscribers.

ESPN’s John Skipper (center) joined NBA Commissioner Adam Silver (right) and Wizards owner Ted Leonsis (left)in 2014 to announce their massive new rights deal.
Photo by: NBAE / GETTY IMAGES
Soon after, Skipper and NBA Commissioner Adam Silver shook hands on a deal worth a whopping $1.4 billion per year.

The sum shocked outsiders. ESPN and Turner Sports committed to pay the NBA roughly $24 billion for a nine-year deal.

Skipper’s programming team was overjoyed. Sure, the rights fee was big. But the deal fit with ESPN’s strategy in the changing media world: secure the biggest sports rights with long-term contracts. The NBA runs through the 2024-25 season, and Skipper dismisses critics who hint the network may have overpaid.

“ESPN is undeniably stronger as a result of our NBA rights agreement. It brought us unprecedented access to NBA games and content at a cost that fully reflected its value in a very aggressive, competitive landscape,” Skipper said. “As we do for any negotiation involving a major, ascendant property, our approach centered around a disciplined appraisal of the overall value across ESPN and its appeal to sports fans, distributors and advertisers.”

The NBA was the network’s last major deal in a successful run of rights agreements, which includes deals as far out as the ACC, which runs through 2035-36.

These were heady days for ESPN. The sports network drove Disney’s stock price and delivered high single-digit profit growth for the company. Disney’s stock rose roughly 35 percent in the year before ESPN’s NBA deal became public (Oct. 1, 2014-Oct. 1, 2015).


But those go-go days didn’t last. ESPN lost more than 3 million subscribers in the year after its NBA deal, according to Nielsen. The subscriber losses especially spooked Wall Street. Seeking to soften concerns, Iger told analysts during an August 2015 earnings call that ESPN had seen “some modest sub losses,” an admission that sent all media stocks into a tailspin. Disney shares fell nearly 10 percent the next day, as Iger forecast that ESPN profit growth would slow.

The situation left ESPN in an unfamiliar place. Iger’s comments marked the beginning of a slump the company still is trying to overcome. It is looking to maintain profit margins by cutting staff, trimming production costs and shoring up its management team. But the growth has slowed, forcing the company to make tough decisions.

Two months after Iger’s comments, ESPN laid off more than 300 employees, mostly executives with long histories at the company. A year and a half later, it went through another round of layoffs, about 100 on-air hosts, analysts and reporters. Many of the people who were laid off blamed the size of the NBA deal — and other rights deals before it — as a main reason, a contention that ESPN executives vehemently deny.

ESPN’s subscriber base has seen a steady decline since the summer of 2011, when it was in more than 100 million homes. The most recent Nielsen estimates have ESPN in 87 million homes — a loss of 13 million subscribers over six years. With a current affiliate fee of $8 per subscriber per month, that’s more than $1 billion per year in affiliate revenue that ESPN is not getting.

Still a place for sports fans

ESPN still is far and away the biggest and most profitable company in the pay-TV business. Its executives are confident that its rights deals and affiliate relationships position it well for the digital future. Even with its challenges, ESPN still brings in enough cash to pay top dollar to acquire the rights it wants. That’s why ESPN was willing to commit to such a big increase for the NBA, whereas just a year before it did not even submit a bid for NASCAR.

ESPN executives know that the pay-TV model responsible for the network’s wild growth is under pressure. That’s why it is supplementing linear TV with over-the-top distribution and digital offerings. Of course, digital usage is nowhere near what linear TV provides yet. But ESPN executives confidently say they are better positioned for the media future than other networks.

ESPN’s key media rights

Property Length Avg. annual value Total value Final season of contract
Australian Open 10 years NA NA 2021
BYU football 8 years NA NA 2018
College Football Playoff* 12 years $608.33 million $7.3 billion 2025
IndyCar 6 years NA NA 2018
MLB 8 years $700 million $5.6 billion 2021
MLS** 8 years $38 million $304 million 2022
NBA 9 years $1.4 billion $12.6 billion 2024-25
NFL 8 years $1.9 billion $15.2 billion 2021
The Masters 1 year NA NA Year-to-year
U.S. Open (tennis) 11 years $75 million $825 million 2025
Wimbledon*** 12 years $40 million $480 million 2023
WNBA^ 9 years $25 million $225 million 2025
American Athletic Conference 7 years $18 million $126 million 2019-20
Atlantic Coast Conference 20 years $240 million $4.8 billion 2035-36
Big 12 Conference^^ 13 years $100 million $1.3 billion 2024-25
Big Ten Conference^^^ 10 years $100 million $1 billion 2016-17
Mid-American Conference 13 years $8 million $104 million 2026-27
Pac-12 Conference# 12 years $125 million $1.5 billion 2023-24
Southeastern Conference## 20 years $300 million $6 billion 2033-34

NA: Not available
* Figure takes into account the $215 million annual payout ESPN has committed to the “contract” bowls — the Rose, Sugar and Orange — in addition to the playoff package.
** Total shared deal with Fox is worth a combined $600 million.
*** Terms were not disclosed, but people familiar with the agreement said the 12-year deal has a value of about $480 million.
^ As ESPN renegotiated its NBA deal in 2014, it opened up the WNBA deal as well, and committed to pay the women’s basketball league a rights fee of about $25 million a year starting in 2017.
^^ ESPN/ABC and Fox share the league’s football inventory, while ESPN/ABC is the exclusive provider for men’s basketball.
^^^ As part of their deal with the Big Ten, ESPN/ABC and Fox will each air approximately 25 football games and 50 basketball games each year, beginning in fall 2017.
# Total shared deal with Fox is worth a combined $3 billion.
## Figure is an industry estimate on the latest SEC deal.
Source: SportsBusiness Journal research

 
“We recognized the early signs of a shift in the industry, anticipated its impact on our business, and adapted quickly with a strategy that reflects the evolving market,” Iger said in May on Disney’s second-quarter earnings call.

As evidence, executives point to the popularity of ESPN’s app, which averaged a monthly audience of nearly 23 million unique users who spent 5.2 billion minutes on it. They also point to the direct-to-consumer offering it is launching this fall through its BAMTech investment. The ESPN-branded service will generate revenue through a mix of subscriptions and advertising by targeting niche sports from college, tennis, soccer, rugby and cricket. At least initially, all programming will be original — none will be simulcast from ESPN.

ESPN executives say these types of moves are part of the company’s long-standing culture, and align with the company’s history as a first-mover — as it was among the first TV networks in internet video, mobile, HD and 3-D.

“We continue to make sure that the company pivots into the transformation, and doesn’t build a wall around incumbency,” said Burke Magnus, ESPN’s executive vice president of programming and scheduling.

ESPN executives still see their company as cutting edge and genuinely are surprised by the glee that people take in ESPN misfortunes these days, seemingly cheering every subscriber loss. It marks a stark contrast from nearly 40 years ago when ESPN was created by sports fans for sports fans. ESPN was the epitome of cool through the 1980s and ’90s, developing stars and popularizing their catchphrases.

The move to jettison on-air stars like John Clayton and Trent Dilfer, who were part of the April layoffs, has thrown the company under a media microscope and surprisingly turned consumer sentiment against it. In May, The Ringer published a 1,600-word story with the headline, “Why Does Everyone Want ESPN to Fail?” ESPN’s fortunes have become cocktail party chatter in the sports business, with most conversations starting with questions about what’s happening in Bristol. Some talk about it with a sense of smugness; others with concern.

ESPN’s executives still see Bristol the same way, with a workforce that is filled with sports fans who want to serve sports fans. This was evident earlier this month during ABC’s telecast of the NBA Finals Game 5, when a couple dozen millennial employees watched the game in two Bristol conference rooms, swiftly cutting real-time highlights for ESPN.com, sending out alerts for mobile users and updating ESPN’s social feeds.

“We always have been the little engine that could,” Magnus said. “That’s the culture that exists here to this day.”

Digging the deeper moat

ESPN’s strategy of investing heavily in the rights it prioritizes has been effective so far. The only property it wanted and didn’t get was the World Cup, which went to Fox in 2015.

But according to interviews with more than 30 sports business executives inside and outside of Bristol, many critics believe the way that strategy has been employed suggests that ESPN is an undisciplined negotiator, often spending more than it needs.

These critics bring up a litany of deals where they believe ESPN could have negotiated better.

Examples go back to 2008, when ESPN outbid Fox Sports by a massive $100 million over four years to bring the BCS from broadcast to cable. At the time, ESPN’s subscriber base was growing, and the network was flush with cash. Still, the bid was viewed as an example of ESPN’s penchant to spend more than it needed. Would the BCS have moved to ESPN for $50 million more? What about $25 million more?

ESPN executives don’t focus on the total payout. Instead, they look at the overall benefit for the ESPN brand and stress the deal to bring a major college championship to cable TV was profitable — even at that price. By convincing the college conferences to hold their football championship on cable television, it became easier to convince other properties to make a similar move, leading to the Rose Bowl moving to cable in 2011.

“We’ve placed our bets,” Magnus said. “We have the strongest portfolio of anybody in the business by a wide margin.”

Several critics also questioned ESPN’s NFL renewal in 2011. The eight-year, $15.2 billion deal ($1.9 billion per year) for “Monday Night Football” was so much higher than expected that critics contend it set the market for sports rights way too high, and cast the die for every overheated rights deal that followed, like the NBA and MLB.

The deal, which involved then ESPN President George Bodenheimer and Iger, was cut at a time when ESPN’s distribution footprint was at its highest, around 100 million homes. During negotiations, ESPN executives viewed the pay-TV business as mature and did not expect growth. They saw no signs of cord cutting or subscriber losses. Critically, several sources say that the NFL deal financials were modeled on subscribers remaining flat.

ESPN lost “Sunday Night Football” to NBC, so it dug in deeply for “Monday Night Football.”
Photo by: GETTY IMAGES
Internally, some executives pushed to have ESPN wait and let the broadcast networks cut their deals and set the market. After all, ESPN already was paying the NFL’s highest rights fee. Disney and ESPN’s top executives, though, did not want to risk losing the NFL. Disney had taken a similar “go slow” approach seven years earlier and wound up losing “Sunday Night Football” to NBC. Its executives did not want to make the same mistake.

Plus, ESPN had to worry about far more than just the broadcast networks, as the seller’s market was boosted by competition. Broadcasters tried to replicate ESPN’s success: NBC relaunched its Versus sports network as NBC Sports Network in January 2012, and Fox replaced its Speed channel with Fox Sports 1 as part of a heavily hyped August 2013 relaunch.

To keep these competitors at bay, ESPN decided to, as Skipper put it, build a deeper moat. And that was when rights really began to get pricey.

In the spring of 2011, months before ESPN completed its NFL deal, NBC thought it had a deal with the Pac-10 worth $225 million per year. NBC already carried Notre Dame football, and the deal would have given the network’s sports channel a foothold in the college marketplace. Before NBC and the Pac-10 signed their contract, Skipper, who ran ESPN’s programming group at the time, called Fox Sports’ Randy Freer and came up with a unique and rarely seen bid — a combined offer of $250 million per year. The Pac-10 ended up spurning NBC and signed a deal with ESPN and Fox.

A year later, ESPN beat NBC Sports to the punch again — this time with MLB. While NBC Sports executives were in London for the Olympics, ESPN and MLB executives met privately to cement a deal that NBC wanted.

Disney Chairman Bob Iger gave his blessing to ESPN’s rights deals, opting not to wait until other players made the first move to set the market.
Photo by: GETTY IMAGES
Skipper, who had become ESPN’s president by then, agreed to double the annual rights fee, from $350 million per year to $700 million. The huge increase came without significant postseason games — ESPN has the rights to one wild-card game. In fact, MLB officials were surprised that ESPN didn’t push harder for postseason rights. But ESPN executives said postseason baseball did not work for its fall schedule because it was filled with college football, which generally brings in higher ratings.

Even though national MLB ratings had been dropping significantly leading up to the deal, Skipper again saw an opportunity to keep a marquee package away from a competitor. Plus, he liked the sheer number of hours MLB provided, especially in the summer months.

The deals kept adding up. In May 2013, it signed an 11-year, $825 million deal to take the U.S. Tennis Association’s U.S. Open from CBS. In April 2014, ESPN agreed to pay $100 million for one NFL wild-card playoff game. In May 2014, it committed at least $37.5 million per year for Major League Soccer (up dramatically from its previous annual payout of $8 million per year).

But it wasn’t just about sports rights where ESPN committed the cash. The network’s reaction to competition also led to significant pay increases for several on-air personalities — paying some studio hosts well into seven figures — to keep them from going to Fox Sports 1 or NBC Sports Network.

ESPN insiders acknowledge those deals overvalued some of their on-air personalities and played a big part in ESPN’s decision to lay off more than 100 hosts, analysts and reporters earlier this spring.

Distribution takes a dive

The increased spending on rights and talent came as the sports network’s subscriber numbers declined. Investors have kept an aggressive focus on ESPN’s subscriber base, and during Disney’s earnings call in May, for example, five of the first six questions to Iger were ESPN-related issues.

ESPN’s subscriber losses outpace the rest of the pay-TV industry. Since June 2011, the network has shed 13 million homes, according to Nielsen estimates. By comparison, the overall pay-TV industry is 9 million homes smaller, according to Nielsen.

ESPN executives calmly explain that their subscriber losses recently have become aligned with others, like Fox Sports 1. Since the beginning of the year, FS1 has lost 1.5 million subscribers, a figure that is bigger than either ESPN, which lost 1.1 million subscribers, or ESPN2, which also lost 1.1 million.

Distribution executives place much of the blame for ESPN’s subscriber loss on Disney, rather than ESPN. Distributors’ complaints go back to a 2010 deal Disney made to allow Apple’s iTunes to sell individual ABC shows to consumers for 99 cents. ABC was the first big broadcaster to license its content in such a way. Iger joined the Apple board the following year.

At the time, distributors were irate. Some still are. They wanted programmers to hold the line on the cable business a little while longer and were furious that it was Disney — a group that commands the biggest license fees — that was first to make a move.

ESPN’s affiliate group met with distributors in the aftermath of the announcement and got an earful. At the time, distributors warned that ESPN — the network that commanded the highest license fee — stood to lose the most if its parent company was going to sell its programming on the cheap outside of the cable bundle.

They pointed out that even though ESPN was one of the most popular cable channels, most subscribers did not watch it regularly. Non-sports fans who wanted to watch ABC’s entertainment programming would have more of an incentive to ditch their pay-TV subscription. Add in Disney’s 2012 streaming deal with Netflix and its 30 percent ownership in Hulu as factors that hastened the cord-cutting trend, and distribution executives complained that it seemed to them like Disney was encouraging cord cutting.

“It was akin to pouring kerosene on a cord-cutting fire,” one distribution executive said. “Everybody could see where the industry was headed. But if Disney took longer, would it have been a 20-year process instead of 10? It’s hard to know.”

Many of ESPN’s top executives at the time also were frustrated. Sources said they had little input on those Disney deals.

Distributors started creating low-cost packages as a retention method to keep their customers from cutting the cord. Many of those packages do not include ESPN, a move that surprised many cable veterans who assumed that the network’s contracts would not allow cable operators to keep ESPN off those packages. Standard cable contracts mandate that channels have to be in a certain percentage of homes — called “minimum penetration thresholds.”

Around 15 years ago, though, ESPN took those clauses out of its deals in exchange for convincing distributors to pay a higher license fee. Several distribution executives describe the move as a good one for ESPN at the time, as it made sure that the channel not only had the highest affiliate fee in the business, but its annual increases were bigger than other channels’ entire fee.

In 2016, for example, distributors paid ESPN $7.24 per subscriber per month, according to Kagan. In 2017, that fee increased to $7.89, an increase of 65 cents. Only 13 channels make more than 65 cents per subscriber per month, including four Disney-owned channels — ESPN, Disney Channel ($1.49), ESPN2 (98 cents) and SEC Network (72 cents).

Even though ESPN’s distribution is smaller, the network still is making more in affiliate revenue thanks to those increases. ESPN executives insist they like that trade-off, and distribution executives even privately agree that the 15-year old arrangement has been good for ESPN.

ESPN has made up some of that distribution with deals for digital video players, like Sling TV, Hulu, PlayStation Vue, DirecTV Now and YouTube TV. But those subscribers add up to around 2 million subscribers, which does not come close to offsetting the amount lost from traditional pay TV.

“All these new distributors … have concluded that launching new platforms without ESPN is very challenged,” Iger said in May. “We’ve seen really nice growth there but it’s nascent.”

As the biggest sports media company in the United States, ESPN executives realize that they are seen as the industry’s bellwether. They grow frustrated at a narrative that paints ESPN as a declining sports media power, beholdened to an economic model that critics say is destined to fail. But Bristol remains undaunted. Sure, there may be bumps in the road. But they insist they are well-prepared for the future, regardless of what that future looks like.

“There are challenges,” Magnus said. “The challenges are different than we have had before based on an industry that’s transforming. The company’s still very strong, and we are well-positioned.”

ACC Commissioner John Swofford joined Skipper to outline plans for the network.
Photo by: ESPN IMAGES
The ACC Network is off and running with its first distribution deals.

The ESPN-owned conference channel recently secured its first carriage agreements with digital video providers, guaranteeing that the channel will be available to consumers when it launches in August 2019. The deals mark an important first step that comes as critics question the network’s viability in such a volatile media marketplace. ESPN would not identify the providers who agreed to a deal, saying it is with providers whose carriage deals run beyond 2019.

So far, PlayStation Vue, DirecTV Now, Sling TV, YouTube TV and Hulu have deals to carry ESPN programming. It’s not known which ones also will take the ACC Network, though it should be noted that ESPN’s parent, Disney, owns 30 percent of Hulu.

The ACC Network was part of a larger package of Disney-owned channels sold to some of these digital video providers. It’s not known how much ESPN is charging for the ACC Network, but it’s expected to be lower than the rates for the SEC Network (72 cents per subscriber per month, according to Kagan) or BTN (43 cents, according to Kagan). These early distribution deals are important for ESPN because they will exert pressure on larger distributors to cut similar deals or risk losing subscribers who want to watch ACC sports.

SBJ media writer John Ourand speaks with Executive Editor Abe Madkour and senior writer Bill King about his reporting of the ESPN story.

Whether bigger distributors push back on the ACC Network in an environment where pay-TV channels have been losing subscribers remains to be seen, but one of the first tests will come this fall when ESPN renegotiates its affiliate deal with cable operator Altice USA, formerly Cablevision. Altice USA primarily serves areas around New York City, and it is the one major distributor that doesn’t carry the SEC Network, another ESPN-owned conference channel that launched in 2014.

Between now and the ACC Network’s planned launch in 2019, ESPN also has affiliate deals coming up with Verizon Fios (at the end of 2018), Charter (mid-2019) and AT&T (late 2019), sources said.

“We’ve yet to really get into the meat of distribution conversations because it is a couple years away,” said Burke Magnus, ESPN’s executive vice president of programming and scheduling. “We feel every bit as optimistic as we did when we announced it.”

Magnus said negotiations have been helped by the ACC’s on-field successes, which include the two most recent national championships in football (Clemson) and college basketball (North Carolina).

The ACC also touts its massive footprint, which ranges along the Eastern Seaboard from Miami to Boston, accounting for more than 40 percent of the nation’s households.

Still, the ACC has prepared its stakeholders for tough distribution battles, especially in this climate.

The ACC’s presidents were joyous at the news last summer that ESPN was fully committed to an ACC Network, but at the same meeting they were dealt a word of caution. There will be skeptics about the launch of a linear channel, said Commissioner John Swofford and the league’s media consultant, Wasserman’s Dean Jordan.

As recently as last month, veteran media analysts like Neal Pilson and James Andrew Miller said ESPN’s round of about 100 layoffs should be reason for the network to re-evaluate an ACC Network. In fact, the layoffs prompted a May 3 conversation between Swofford and ESPN President John Skipper.

Later that day, Swofford wrote to his presidents and athletic directors with this message: Tune out the critics, the layoffs don’t affect us, our plans for a network are “full-steam ahead.”

That emboldened ACC athletic directors to believe that the network could be successful enough to close the financial gap between their conference and the power five’s richest leagues, the SEC and Big Ten.

At a meeting with his board of directors last February, Florida State AD Stan Wilcox said a new network could deliver as much new revenue as the SEC Network did in 2014 — about $7.5 million per school. The SEC Network staged the most successful launch in cable TV history with more than 60 million homes and delivered a profit of about $210 million in its first year. The SEC, like the ACC, shares all network profits 50-50 with ESPN. While such lofty expectations might seem a little over the top, other ACC ADs said they were going on the guidance they received from ESPN. “We’re not pulling these numbers out of thin air,” one ACC AD said. “This is what we’re being told.”

With ESPN’s ability to grow revenue deeply mitigated against the tide of declining subscribers, a new product like the ACC Network represents one of the ways ESPN can develop new profits.

If the ACC Network launches like the SEC, that could result in a $100 million profit for ESPN, which explains why the media giant is throwing its weight behind an ACC linear channel at a time when it might seem counterintuitive. The ACC also represents the only conference where ESPN owns all the rights, from TV to digital to marketing, another reason why the effort has ESPN’s full backing. ESPN owns most of those same rights with the SEC, but CBS also owns a selection of games.

Whether the ACC Network can replicate that kind of record launch like the SEC remains to be seen, but ACC officials are repeating the same mantra: “We’re very optimistic.”

“The advantage the ACC has over most, if not all, conferences is they couple high-quality football with the highest quality men’s and women’s basketball,” Magnus said. “It’s pretty formidable.”


The apps can learn a user’s behavior and gradually personalize the content.
Photo by: ESPN
ESPN’s future may not involve ESPN2, ESPNU or ESPNews.

It may not even involve ESPN.

The future of video — at least from ESPN’s standpoint — is being developed from a windowless Innovation Laboratory on ESPN’s Bristol campus. That’s where two of the network’s top technology executives showed off apps they have developed for Apple TV and DirecTV that strive to blur the distinction between the content that comes from linear television or the internet.

“The concept of channels is somewhat antiquated,” said Aaron LaBerge, ESPN executive vice president and chief technology officer. “What you care about is what you can watch now. We want to make sure that the options you are presented with are the things you care about.”

SBJ media writer John Ourand speaks with Executive Editor Abe Madkour and senior writer Bill King about his reporting of the ESPN story.

The blurry distinction is most noticeable on the Apple TV app, where ESPN’s live events are highlighted at the top of the screen and ESPN’s linear channels are shoved at the bottom.

“The experience is entirely organized around the content,” said Mike Andrews, ESPN’s vice president of media engineering. “You have to go to the bottom to navigate by network, and that’s intentional. It’s about the content.”

Situated on the ground floor of a campus building, the Innovation Lab is the clearest sign that ESPN is preparing for the future of video in a non-linear world. Featuring up to 15 big screens, the room is filled with a seemingly endless supply of gear, from 4K to 8K and the most up-to-date, over-the-top services. During a visit in June, streaming platforms from Apple TV, Roku, PlayStation, Xbox, Chromecast and Fire TV were on display, showing the future of video, at least from ESPN’s perspective.

ESPN already has launched an app on DirecTV. Viewers who turn to any ESPN network via a GE set-top box will see a pop-up box emerge in the lower right-hand corner of the TV screen. Viewers who click on the box are taken into ESPN’s app, which provides a menu of programming including live games, short-form highlights, news videos and video-on-demand programming from ESPN’s linear networks and ESPN3.

One of the most unique features of these apps is the personalization ESPN is developing. ESPN is monitoring “click-stream usage,” allowing it to build a profile of the types of videos users click on both within the app and on ESPN.com. Someone who regularly clicks on Baltimore Orioles news and highlights, for example, will have news and video of Baltimore pushed to the top of their personal app screen.

“Maybe you didn’t say you’re a tennis fan but you’re looking at tennis five or six times a week, we’ll start feeding you tennis content as well,” Andrews said. “That persona travels with you across all of our platforms.”


ESPN’s decision to present Caitlyn Jenner with the Arthur Ashe Courage Award rankled some conservatives.
Photo by: GETTY IMAGES
One of ESPN’s top executives accused Fox Sports of advocating what he called a false notion that the network operates with a liberal bias.

“The whole narrative is a false one that was seeded and perpetuated primarily by a direct business competitor,” said Burke Magnus, ESPN’s executive vice president of programming and scheduling. “We have no political agenda whatsoever.”

Fox Sports has given voice to many of the accusations of ESPN’s liberal bias. For example, Fox Sports 1’s afternoon studio show co-host, Jason Whitlock, wrote a May 7 editorial for The Wall Street Journal in which he accused ESPN of adhering to a “strict obedience to progressive political correctness.”

Whitlock is a former ESPN employee who spent two stints with the Bristol-based company before leaving for Fox. Fox Sports and The Wall Street Journal share a corporate parent in News Corp.

SBJ media writer John Ourand speaks with Executive Editor Abe Madkour and senior writer Bill King about his reporting of the ESPN story.

Another Fox Sports personality who continually questions ESPN’s business model has also taken on the ESPN-as-liberal topic several times. In an April post on his Outkick The Coverage blog, Fox Sports personality Clay Travis wrote, “ESPN made the mistake of trying to make liberal social media losers happy and as a result lost millions of viewers.”

These types of commentaries have become a popular topic in traditionally conservative media, where political websites like Breitbart News have started covering ESPN heavily.

When ESPN replaced one NBA “Countdown” host (conservative leaning Sage Steele) with another (liberal leaning Michelle Beadle), Breitbart’s headline read, “Pro-American, Non-PC ESPN Host Sage Steele Removed From NBA Countdown Show In Favor Of Michelle Beadle.”

The blowback around Steele became so intense that ESPN President John Skipper found himself in the unusual role of having to publicly defend one of his on-air hosts, saying that Steele “definitely has a bright and long-term future at ESPN and my complete support.”

Sure enough, Steele signed a new deal in May to host “SportsCenter: AM” from 7-10 a.m. ET.

“It would be foolish in the business that we’re in to take sides on the political arena,” Magnus said. “Our business competitor perpetuates this narrative because in this highly partisan time, it suits them to highlight this distinction, even when it doesn’t exist.”

While some see a liberal point of view in the “SportsCenter” commentary or on the social media feeds of on-air personalities, others cite larger examples. Many of the liberal bias complaints go back to 2015 when ESPN gave transgender woman Caitlyn Jenner the Arthur Ashe Courage Award at the ESPYs. The 7.7 million viewers who tuned in to ABC that year still is the highest viewer number in that show’s history, but the choice still rankles some conservative voices today.

A few months later, in April 2016, ESPN fired Curt Schilling after the conservative on-air analyst posted a social media meme that his ESPN bosses found to be offensive.

ESPN executives say the people who focus on a liberal bias ignore things like the recent rehiring of Hank Williams Jr. to sing the “Monday Night Football” opening or the 2013 firing of the liberal leaning Rob Parker who infamously asked on-air whether NFL quarterback Robert Griffin III is a “cornball brother.”

But this also comes amid reports and speculation that Disney Chairman and CEO Bob Iger is considering a run for president in 2020.

While ESPN executives dismiss the notion that the company is too liberal, sources said ESPN President John Skipper, himself a liberal-leaning executive, has made a point to meet with employees to let them know that nobody at ESPN will be punished for holding a political viewpoint.

ESPN has political guidelines that have been developed and shared with on-air talent. The challenge has been trying to figure out when sports stops and politics starts. Colin Kaepernick’s decision to kneel during the national anthem last NFL season illustrated that problem, as ESPN executives note it became both a sports story and a political story that was debated on the network’s studio shows.


A group of MMA writers and broadcasters, following the lead of reporters in more established sports, has formed the MMA Journalists Association.

The association’s formation was spurred, in part, by an incident last June in which the UFC barred influential MMA journalist Ariel Helwani indefinitely from covering its events, though it lifted the ban a few days later after public uproar. Helwani is part of the new group.

The UFC's action against writer and podcaster Ariel Helwani last year helped prompt journalists' efforts to organize.
Photo by: GETTY IMAGES
“When Helwani blew up, we as a collective group came together on a large email chain and said now is the time we really need to do this,” said Josh Gross, who writes about MMA for The Guardian, a British daily newspaper with a U.S. edition. “Everyone, basically, who covers MMA was on that email chain.”

The four major team sports all have writers associations. The Baseball Writers’ Association of America dates to 1908.
The MMA group expects it will fight for members’ rights and access to events, but the plan is not to be adversarial to major promoters such as the UFC or Bellator at the get-go, according to both Gross and Helwani.

“It’s not so much about sticking it to anyone or being combative,” Helwani said. “Every major sport — and the journalists who cover the sport — have some sort of media organization. And we now believe, for various reasons, that it is important that mixed martial arts does have some sort of association for journalists.”

The group plans to establish standards and best practices for writers, Gross said. More than 70 MMA writers, editors and broadcasters have applied to join the group, but not everyone who applies will be accepted.

“We are going to be very clear in our expectations of what members can and cannot do,” Gross said. “If they are being paid by a promoter, they are not allowed to participate in our group. If they are working with other vested interests in MMA and not disclosing those things and we learn about it, they are not allowed to be part of our group.”
Most MMA media members started writing about the sport online, rather than at traditional newspapers or other news outlets. “We are looking for original journalistic work, and that is the lowest barrier for applicants,” Gross said.

The group also provides a vehicle to comment on day-to-day issues that MMA writers deal with, such as bad Wi-Fi at fights, Gross said.

MMA writers have tried before to form a professional association, including in 2007, 2009 and 2012, but talks fizzled out.

This time the group has set up a tax-exempt organization, as well as a website and a constitution. Vox Media, which owns MMAFighting.com, provided legal advice in helping set up a 501(c)(3) for the organization but has no control over it, according to Gross and Helwani.

The MMAJA has an interim board of four officers and three directors. Dann Stupp, MMA editor for USA Today, is president; Helwani, who writes for MMAFighting.com and hosts “The MMA Hour” podcast, is vice president; Gross is secretary; and Marc Raimondi of MMAFighting.com is treasurer. Plans call for the group to officially vote on a board in the next several months.

Media associations in other sports, such as baseball, vote on awards for athletes in their sports, as well as membership in the sports’ hall of fame. The MMAJA will have annual awards for “exceptional work” in the sport itself, as well as the media coverage of it, according to its website.

Voting on an MMA hall of fame or fighter rankings could be something the MMAJA looks at, but that is down the road, Helwani said.


Wimbledon is merging its radio and digital operations this year.
Photo by: GETTY IMAGES
TV ratings for Wimbledon may be on the decline, but one medium is unexpectedly surging: streaming radio.

Listeners to the event’s radio broadcast through Wimbledon.com leapt 500 percent between 2014 and 2016 to 30 million, and further growth is expected for the fortnight beginning next week. In fact, the radio offering will get an early start this year with first-time coverage of this week’s qualifying tournament.

Audio of the event over radio in the U.S. is offered by ESPN through SiriusXM, which does not disclose listener figures.

TUNING IN

The radio audience at Wimbledon.com is on the rise.

Year Event listeners
2014 5 million
2015 15 million
2016 30 million

Source:  All England Lawn Tennis Club


“We expected it to grow [but] I don’t think we expected it to get the growth that it has,” said Mick Desmond, commercial and media director of the All England Lawn Tennis Club, which owns and operates the tournament. “You are seeing radio as a medium kind of … repositioning itself because it is such an easy medium to engage with. Certainly, [for] anybody who is mobile, it is very, very easy. We are catching a lot of people on the go.”

The majority of the listeners come from the U.S. and U.K. in roughly equal numbers, with heavy presences from Australia, China and India.

The All England Club through its agency, WME-IMG, produces the radio feed from all courts, and that is streamed on the website. This year, the club is merging the radio and digital operations. The Wimbledon Channel, a link at Wimbledon.com, will now begin and end each day with a simulcast of the radio broadcast.

Long an afterthought given the prominence of television, audio in general has been growing in many markets as people start using their phones for listening, said Kevin Straley, chief content officer for TuneIn, a streaming radio website and app. “It is a perfect storm” of two trends, he added: people with mobile devices who also do not have a lot of time to sit and watch a telecast. TuneIn offers the Wimbledon.com radio stream, and from 2014 to 2016, 1 million unique users accessed Wimbledon Radio across the content on the app.

“The value … for rights holders isn’t just about visual,” said Tim Crow, CEO of U.K.-based sports marketing firm Synergy. And “it complements the web so well and the rise of podcasts has shown that there is an appetite for audio content.”

Podcasts are also driving audio usage, and Wimbledon is beginning to emphasize its own effort.

To date, the All England Club does not plan to profit on the growth. There is no advertising during the radio broadcasts or sponsors of the audio. The link to the radio at Wimbledon.com is in a Rolex scoreboard, the only nod to capitalizing on audio.

“Radio first and foremost is communications, storytelling and marketing for us,” Desmond said. “We are happy to grow these assets and bring the opportunity to monetize it at a slightly later date. But first and foremost, it is building our brand.”