ESPN Execs Talk Fox Sports 1 Competition, Outline Programming Strategy
Network president John Skipper acknowledged that NBA and Big Ten Conference rights run out in the next couple of years and bidding from recently launched Fox Sports 1 will likely drive the costs higher.
Walt Disney's ESPN has locked up the rights to so many sporting events that it has left a "bleak desert environment" in its wake, network president John Skipper told investors and analysts on Thursday.
Skipper, speaking in Bristol, Conn., at Disney Investor Day at ESPN, showed a graphic representation of the rights the network holds to a plethora of sports, including the NFL and Major League Baseball through 2021, and some lesser sports and college rights as far out as 2034.
Skipper acknowledged, though, that its NBA and Big Ten Conference rights run out in the next couple of years and bidding from recently launched Fox Sports 1 will likely drive the costs higher.
"Obviously, competition puts pressure on rights fees," Skipper said. "Sports rights cost more money."
Disney CEO Bob Iger, though, noted ESPN's willingness to spend what it takes in order to maintain its leadership position.
"Sports television is definitely in my blood, and I can assure you that we're going to continue to invest in ESPN, in its people, in its programming and in its technology," said Iger.
Iger noted that Disney doesn't break out financial results, but the conglomerate's cable network business, which includes Disney Channel, ESPN and many more, contributed a third of Disney's total revenue in its most recent fiscal year and more than half of its operating income.
The event also included surprise guest, quarterback and ESPN commentator Tim Tebow to talk about ESPN's launch of SEC Network, though mostly he reminisced about his playing days while at the University of Florida.
"It's just not a game; it's a way of life," Tebow said of playing SEC football. "They're living and dying with this."
Tebow recalled shaking hands with Florida Gators fans who had his face tattooed on their shoulders.
"My parents' first date was at the Florida-Georgia game," he said. "Every game is so big."
During the presentation, the executives focused much of their attention on 35-year-old ESPN as a brand, oftentimes comparing it to Fox Sports 1, which is 7 months old.
"Increased choice for the consumer actually heightens the value of brands," Iger said.
Artie Bulgrin, senior vp global research and analytics for ESPN, said 88 percent of Americans over the age of 12 are aware of the ESPN brand, higher than Nike, the Olympics and the NFL.
"It's almost impossible to get to higher levels," he said.
Bulgrin said 21 percent of men age 18 and over call ESPN their favorite network, a higher number than any other network.
"When thinking about watching sports news, sports fans are nine times more likely to name ESPN over No. 2 Fox Sports as their favorite. It's not even close," Bulgrin stated.
Bulgrin said parents have been known to name their children after ESPN, then joked: "We do it for the kids. Let's face it, nobody's naming their kid 'Fox Sports One.'"
Skipper, noting that the executives were in a room full of Wall Street analysts, added: "We also do it for the money."
Bulgrin said nine of every 10 Americans are sports fans -- an all-time high -- including 31 percent who define themselves as "avid" fans.
ESPN's viewers are young, male, affluent and multicultural, and they like to watch the network live, Bulgin said, which means the network is coveted by advertisers.
Bulgrin said while viewers are watching just 58 percent of broadcast TV live nowadays and the rest via DVR, 96 percent of ESPN's viewership is live.
He also said that cord-cutting is not the problem it has been made out to be, because the number of multichannel subscribers has remained in excess of 100 million in the U.S. since 2010.
"We can expect levels to remain fractional," he said of cord-cutters, especially among sports fans.
Skipper also went through a litany of categories in which ESPN is No. 1, including that it's the network consumers most often name when asked which one they intend to spend more money on for access.
"It's John Wooden, Bill Russell, Iowa wrestling and Ben Hur all rolled into one," Skipper said of ESPN.
The executives also showed off a slew of video, including a patriotic new FIFA World Cup commercial, embedded below.