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What Is In ESPN’s Future?

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If you imagine the world of traditional television as a fortress on a mountaintop, one whose walls are crumbling due to heavy fire from players like Netflix NFLX 4.47% and HBO and Amazon Prime, then the seemingly impregnable tower at the center of the fortress would have to be ESPN. Why? Because the Disney-owned channel has the one thing that has managed to maintain its value while everything else gets completely obliterated: Namely, exclusive rights to a world of sports content. But is that enough—and if so, for how long?

You can tell that this kind of concern is weighing on the minds of Disney DIS -9.72% investors, because the stock dropped by close to 10% following the release of the company’s quarterly financial report, despite the fact that the overall numbers for the entertainment conglomerate were pretty good. Almost every questionon the earnings conference call was about ESPN and the ongoing loss of both subscribers and profits.

In a nutshell, the big fear is that the network’s lucrative stranglehold on sports is disintegrating, pulled apart by a combination of cord cutting, streaming via digital services and competitive pressures from all sides. There have already been rumors of cost-cutting and the channel has shed a number of high-profile (and expensive) personalities such as Grantland founder Bill Simmons, now at HBO.

Disney CEO Bob Iger spent much of his time on the earnings call talking about ESPN, and about how he doesn’t see much impact from cord cutting for at least the next five years or so—an estimate that at least some analysts think is absurdly optimistic. Iger also reiterated comments he has made in the past to the effect that if ESPN wanted to, it could come up with its own over-the-top service similar to HBO Now, and that a substantial number of subscribers would likely pay for it.

The Disney CEO also noted that 83% of all multichannel households turned to ESPN in the first quarter of this year, and that 96% of all sports programming is watched live, which he called “particularly valuable in today’s rapidly changing advertising marketplace.” And here are some media-industry analysts who agree with Iger that the existing “moat” around ESPN’s content is still pretty wide.

Ben Thompson, an analyst who writes the subscription newsletter Stratechery, said in a recent update that “ESPN is far better positioned for a world where they must go over the top to consumers than people give them credit for.” Even if ESPN was to charge more than $30 a month per subscriber—as a recent analysis said they would, in order to maintain their existing revenue — Thompson called that “a very realistic target.”

Not everyone is quite as sanguine, however. Analyst Eric Jackson said the channel might be able to engineer a transition to an over-the-top digital version of its existing service, but there are still some large question marks associated with that transition. As he put it:

“What if OTT and any new digital format is one-tenth as profitable as the Euro-socialist cable bundle? If you trade analog dollars for digital dimes, how do you wave your hands and chance basic economics?”

One of the things that makes ESPN very different from other streaming success stories such as HBO and Netflix is that the sports broadcaster’s content has an extremely short half-life. Netflix may not mind paying hundreds of millions of dollars for a TV show because it knows it can rebroadcast and license that content forever, but ESPN’s library consists of things that only have value for a few hours.

On the one hand, this short life-span is the channel’s biggest strength: When a major sporting event is taking place, people want to see it right away, and they are willing to pay handsomely for that ability. But if competitive pressure continues to increase, that life-span could become a serious weakness.

 

One potential source of competition for ESPN, ironically, is the very sports leagues and franchises that it relies on for its livelihood. Major League Baseball’s internal streaming and mobile technology operation, known as BAM, has quietly become a powerhouse in that part of the market, and now it has signed a deal to do all of the broadcasting for the NHL as well. Thompson argues that most leagues will opt for the broader reach of ESPN rather than go direct, but it’s unclear how many will feel that way, or for how long.

ESPN has signed expensive long-term contracts with most of the leagues it deals with, but if more and more of them start to pursue their own over-the-top deals via providers like BAM or even Yahoo and other outlets, then ESPN’s iron grip on live sports could continue to weaken.

If you’re an investor in Disney because of its ESPN stake, these are some of the questions you probably want to ask yourself: How much value do those existing contracts have as the TV market continues to implode? What could potential competitors, including the leagues themselves, do to ESPN’s margins? And if it decides to (or is compelled to) offer its own over-the-top service, how many people would likely subscribe to it directly, and how much would they be willing to pay?

Credit to Fortune who originally published this article

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Domonique Foxworth: Tom Brady Contract Is About Impressing NFL

“I think that’s why the booths look the way they look. It’s because the league wants their games to feel big, and it’s worth it to them.”

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The shake-up of NFL TV broadcast booths has been one of the top storylines in the league this offseason.

Part of the reasoning is because of the massive sums of money involved. Whether it’s Joe Buck and Troy Aikman or Tom Brady, NFL broadcasters have been getting paid. And it doesn’t seem like the spending is going to slow down anytime soon.

Speaking to Bomani Jones on The Right Time, Domonique Foxworth said the NFL just wants to continue to get bigger and bigger even with its broadcast crews.

“These TV partners want to be in good with the league. And I think that’s what this Tom Brady contract comes down to,” Foxworth said. “I think that’s why the booths look the way they look. It’s because the league wants their games to feel big, and it’s worth it to them.”

Even with some feeling like Brady is uninteresting and likely won’t move the needle as an analyst, it’s the name recognition factor that will set the table for Brady in the booth.

“I do believe that if you turn on an NFL game, and Tom Brady’s talking about it, it feels bigger no matter what he’s saying,” Foxworth said.

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Joe Buck, Troy Aikman Visit Bristol For First Time Since Signing With ESPN

“My anticipation for the start of this season is literally off the charts; I’ve never been this excited.”

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Monday Night Football on ESPN is going to have a new sound this year with Joe Buck and Troy Aikman in the broadcast booth. The deal is reportedly worth a combined $165 million, and will officially begin on September 12 when the Denver Broncos visit the Seattle Seahawks at 8:15 p.m. EST on ESPN.

“I’m thrilled to officially welcome Joe and Troy to ESPN and Monday Night Football,” said ESPN Chairman Jimmy Pitaro. “They are elite broadcasters who have been at the forefront of our industry for more than two decades [and] are universally respected, and fans truly appreciate their candor and expertise.”

Buck and Aikman visited ESPN headquarters in Bristol for the first time today. The broadcast duo, now entering their 21st season in the booth together, are switching networks for the first time, a move that was initiated because of Aikman’s expiring contract. Throughout the season, Aikman had an inclination that it would be his last at Fox; however, he would have stayed at the network. The original thought, according to Aikman, was that he would call Thursday Night Football on Amazon Prime while continuing his role in doubleheader games with Fox – but it was quickly realized that it would not be feasible.

“ESPN began conversations with me, and it was an opportunity that was just the best fit for me,” said Aikman. “I didn’t think that was going to happen until a little bit after the Super Bowl.”

Buck’s contract was not set to expire until the end of this season, but after watching his veteran partner change networks, the possibility existed that he too would depart.

“When I knew Troy was gone, I think there was a little bit more intensity in my talks with Fox about ‘Was I going to stay there?,’ or ‘Was I going to try to continue my relationship on-air with Troy?’,” Buck reflected.

After approximately a month of negotiations between Buck and Fox, the broadcaster was off to ESPN. While the negotiations moved quickly, Buck never felt like he was taken for granted by Fox after working there for 28 years.

“They tell you how much you’re worth to them every time a check arrives,” said Buck. “They prove all that stuff by letting you continue to do it, and the relationships that we had. It was very collegial and very friendship-driven, much more so than employer-employee at Fox, and I expect the same will continue here at ESPN.”

Much of the media landscape across the National Football League has been significantly altered going into next season. Whether it is Buck and Aikman going from Fox to ESPN; the new Fox booth of Kevin Burkhardt and, upon his retirement, Tom Brady; the addition of Thursday Night Football on Amazon Prime with Al Michaels and Kirk Herbstreit; and Mike Tirico being moved into the lead Sunday Night Football role with Cris Collinsworth, the game will adopt a new sound upon the season’s opening kickoff.

ESPN Head of Event and Studio Production Stephanie Druley commented that amid the new broadcast landscape, the network believes it now has the number one football broadcast booth in the country. Additionally, she revealed the addition of a second Monday Night Football booth to be announced in the coming weeks as part of the network’s new broadcast rights deal with the NFL. The secondary booth will be calling three games this year and five games next year, and an announcement with more details is forthcoming.

For Buck, being welcomed to ESPN was representative of a full-circle moment, as his father Jack called Monday Night Football on the CBS Radio Network with Hank Stram. While Buck idolized his father and strived to one day be like him, he was always attentive as to what was going on in one of the other booths in the stadium.

“I knew as a little kid something special was going on two doors down, and that was when Howard Cosell was there; Don Meredith was there; Frank Gifford was there – and it was, ‘Man, that is the peak of sports and media,’” said Buck. “My anticipation for the start of this season is literally off the charts; I’ve never been this excited.”

“This is an opportunity with ESPN that I’m really excited about,” added Aikman. “We’ve been doing it so long in one way [and] it feels like it’s 2001 again…. I have nothing but respect for the people I worked [for] at Fox, and appreciate the way I was treated for the 21 years I was there, but am excited for the next chapter.”

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NFL Explains How World Cup Effected 2022 Schedule

“We didn’t strategically deploy any of our games to either go really strong or go a little less strong, because we knew there was going to be soccer that day.”

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This will be the first year that the World Cup will be contested during the NFL season. It isn’t a challenge professional football is used to in America. That is why Mike North, the NFL’s vice president of broadcast scheduling, told Richard Deitsch that it was important to do some homework.

“Very early in the process we got with our broadcast partner at Fox and we knew that there weren’t going to be any windows where Fox was not going to be able to broadcast an NFL game,” he said.

The real effect had to do with the NFL’s international schedule. Five games will be played outside of the United States borders this season. North said he wanted to understand the potential schedule for the World Cup so he could create the best atmosphere for the international contests.

“I’m not sure we’re doing the right thing for the fan in Germany if we’re playing in Bayern Munich’s stadium while the German national team is playing a World Cup game; I’m not sure we are doing the right thing for our fans in Mexico if we were playing a game in Mexico on a day when the Mexican national team was playing. So we were certainly aware of the World Cup schedule and worked very closely with our friends at Fox to make sure we were aligned on how we were going to approach it.”

North said that he wasn’t worried about football beating fútbol. He just wanted to understand what he was putting his teams up against.

“We didn’t back out of any of our windows. We didn’t strategically deploy any of our games to either go really strong or go a little less strong, because we knew there was going to be soccer that day.”

FIFA moved the World Cup to the final two months of the year in 2022. To play the games any earlier would have meant players would have been dealing with extreme heat in Qatar.

The first match will be played on November 21. The final is scheduled for December 18. That overlaps with weeks 11 through 16 of the NFL season.

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