The New York Times completed its massive three-part series on ESPN today. Written and reported by Richard Sandomir, James Andrew Miller and Steve Eder, the first two parts provided interesting insights into how the network runs college football and how Louisville used ESPN to become a sports powerhouse. Both pieces are highly recommended.
However, part 3 gets to the heart of the matter: The battleground for ESPN’s future.
For all of the network’s success and power, it is possible that the money machine in Bristol could be put on a much slower speed.
The opponents/obstacles are considerable: legislators who want to do away with bundling for cable networks; new network competitors such as Fox Sports 1; and a changing media landscape.
From the story:
So it may be hard to imagine that the sports media conglomerate has arrived at one of the most precarious moments in its nearly 34-year life.
The more than $6 billion in cable fees flowing annually to ESPN from almost 100 million homes is threatened as growing numbers of consumers cut ties with cable providers to avoid rising bills for pay TV, turning instead to video streaming services. In Washington, a renewed push to undo the bundling of channels into cable packages and allow viewers to simply pay for those they want has even drawn the support of Senator Richard Blumenthal, who represents ESPN’s home state.
ESPN’s viewership numbers plunged earlier this year, and that was before the debut this month of Fox Sports 1, a 24-hour network funded lavishly by Rupert Murdoch’s 21st Century Fox. Fox Sports 1 is likely to shape up as ESPN’s most formidable head-to-head rival.
All of this, particularly consumers’ move away from pay TV, is reverberating in Bristol. “This is the most complicated environment we’ve faced in a long time,” said John Skipper, the president of ESPN.
It turns out ESPN also is good at lobbying:
One focus of ESPN and Disney’s largess was Representative Joe Barton, a Texas Republican and the chairman of the House Energy and Commerce Committee, which had purview over television legislation.
In 2004, Mr. Barton had helped derail a legislative move aimed at breaking up bundles. On Super Bowl weekend in February 2005, with the cable controversy bubbling, Disney paid to bring Mr. Barton and his wife to Walt Disney World in Orlando, Fla., records show. ESPN did not carry the game, which was played in Jacksonville, Fla. But in Orlando, Disney was busy entertaining advertisers.
ESPN gathered some of its executives to talk to Mr. Barton about the absence of a college football playoff, an issue that the congressman would eventually explore in hearings.
“It was Preston Padden’s show and Joe Barton’s agenda,” one participant in the meeting said. Mr. Barton’s travel disclosure form for Feb. 5 to 7, 2005, shows that Disney spent $3,354 on the Bartons’ lodging, $1,616 for airfare and $1,200 for meals. He recorded the purpose of the trip as “Speak to executives and fact finding.”
A spokesman for Mr. Barton declined to comment beyond saying that the report “speaks for itself.”
Yep, sure does.
And the unknown looms in the future:
Meanwhile, companies like Google, Sony and Intel are planning virtual cable services that would be delivered on the Internet. They could lure consumers from traditional pay television as low-cost alternatives to traditional pay TV while also competing for major sports properties when ESPN’s contracts eventually expire. Mr. Skipper said he would make deals with these upstarts, but only on ESPN’s terms: they must take all of ESPN’s offerings, not just the ones they want.
With the rise of new competition come questions about the fate of existing customers.
Consumers are fleeing pay TV at a quickening pace: 898,000 in the past year, nearly twice the number in the previous year, the analyst Craig Moffett said. And in the past two years, ESPN has lost more than one million subscribers.
What’s more, ESPN ratings plunged 32 percent in the quarter that ended in June.
Mr. Skipper’s task — very different from that of predecessors who built ESPN into a powerhouse — is to negotiate a deeply uncertain future.
“It’s a high-class problem,” he said.
The stories aren’t as long as Miller’s ESPN book, but they are hefty. So set aside some time to read them. Well worth it.