When I went to ESPN’s headquarters in March, I asked them to take me to the place where they print money. They said it didn’t exist, although I did get to see the nice cafeteria, yet another profit center.
I didn’t believe them and my suspicions were confirmed after reading Kurt Badenhausen’s piece at Forbes.com. He writes that ESPN is worth $40 billion.
Yes, $40 billion. There isn’t another media property as valuable in the world.
Ad revenues at ESPN, now $3.3 billion, can fluctuate depending on the economy (total ESPN revenues, including the networks, magazine and website, are $10.3 billion). Affiliate fees, paid by cable companies to channel owners each month, have steadily grown 8% annually at ESPN in recent years. ESPN and ESPN2 are both in more than 100 million homes and command $5.13 and $0.68 per month, according to SNL Kagan. The next highest among widely available channels are TNT at $1.18 and Disney Channel at $0.99 says Kagan. The average fee for basic cable channels is $0.26.
ESPN’s money machine goes a long way in explaining why the network has locked up long-term rights deals with the NFL, MLB and virtually every major college conference. It is why ESPN will snag the new college football playoff for roughly $500 million per year, beginning in 2014. It even had some money left over to lure Darren Rovell away from CNBC.
Show me the money machine, ESPN. I know it’s there in Bristol.