Wednesday, December 20, 2006

The King of all Sports Media – ESPN


Howard Stern believes he is the self-proclaimed King of all Media. What Howard Stern believes remains open to interpretation, there is no doubt whatsoever the King of all Sports Media is ESPN. Created in 1979, ESPN continued their remarkable growth Tuesday announcing they had acquired a minority stake in the Arena Football League. In the last thirty days along with buying into the Arena Football League, ESPN has agreed to work with NASCAR in securing a new lead sponsor to replace Busch for the sport’s Tier II racing series, announced the creation of a sports film festival with the renowned Tribeca Film Festival, moved forward with plans to expand into England and continues to set cable ratings records with Monday Night Football. All of this accomplished since December 1.

Earlier this month investment bank UBS announced at a New York conference they had determined ESPN value to be $28 billion. UBS said ESPN accounted for 40% of Disney's $70.7 billion market capitalization. Disney owns 80% of ESPN, with Hearst holding the remaining 20%.

"I feel pretty good about ESPN being part of the overall family as it is," said Tom Staggs, CFO of ESPN's parent told Media Post.

UBS made it clear their confidence in ESPN’s value is in part based on how strong the ESPN brand is. Tuesday, the Arena Football League not only embraced UBS philosophy in the value of ESPN’s brand recognition, they married the future of their league to ESPN.

ESPN acquired minority ownership in the Arena Football League as part of a five-year agreement announced Tuesday that includes extensive multimedia rights and a minimum of 26 televised games per season, beginning in 2007. The agreement enhances ESPN’s year-round football programming lineup, the most comprehensive in sports television.

Similar to recent major ESPN content acquisitions, the agreement entails a broad range of rights. Fifteen ESPN platforms will benefit from this new agreement, including ESPN, ESPN2, ESPN on ABC, ESPN Classic, ESPN HD and ESPN2 HD; ESPN.com; Spanish-language ESPN Deportes; ESPN360 (the company's growing interactive and customizable broadband service); Mobile ESPN Publishing (the company's wireless content licensing business); ESPN Radio, ESPN The Magazine and other ESPN-branded services (i.e., iPod, video on demand). ESPN also gains the right to both air and syndicate Arena Football League games through ESPN International.

“We are committed to the Arena Football League and its exciting brand of football. We will help grow the league across all of our multimedia platforms. As the league grows, so will our business, and we see a bright future for us both,” said John Skipper, executive vice president, content, ESPN.

“This is the longest and most comprehensive media partnership in AFL history,” said Commissioner David Baker. “ESPN’s brand is ingrained in sports fans, who watch, read and listen to its multiple media properties. Through its equity purchase, ESPN now owns a piece of the AFL and has the ability to provide exciting football content on Monday nights for fans on a year-round basis. There is no better partner to help continue the AFL’s growth as a leading global, multimedia property than ESPN."

On December 6, ESPN Inc. and Tribeca Enterprises, the parent company of the Tribeca Film Festival, launched The Tribeca/ESPN Sports Film Festival, a multi-platform showcase for independent sports films, it was announced today by John Skipper, ESPN executive vice president, content and Jane Rosenthal, Tribeca Film Festival co-founder. In a multi-year arrangement, The Tribeca/ESPN Sports Film Festival will be programmed and operated by the Tribeca Film Festival with on-air support from ESPN, the world’s leading sports media brand. Targeted at both the film industry and sports film fans, the Festival will feature a complete program of film screenings, live events, online interactivity, and media extensions. An advisory board, comprising leaders in sports and film, is currently in formation.

“ESPN’s collaboration with the Tribeca Film Festival demonstrates our continued commitment to serving sports fans by extending the discussion about sports overall,” said Skipper. “Independent film has grown exponentially in the last few years, and sports-themed films have grown with it. The Tribeca Film Festival has captured sports films like no other film festival and has proven to be creative, smart and passionate about nurturing films of all kinds. Together, we hope to inspire filmmakers to make sports-themed films with this new platform in mind and thereby raise the level of the genre.”

"This brings together sports and film in an exciting new way,” said Robert De Niro, Tribeca Film Festival co-founder.

The inaugural Tribeca/ESPN Sports Film Festival will debut at the 2007 Tribeca Film Festival (April 25 – May 5, 2007) and feature premiere screenings of sports-related narrative and documentary features, short films, industry events, and will include user generated online content curated by the festival’s programmers. At the core of the festival will be the premiere screenings of independent feature films that will be seeking commercial distribution. The festival will also feature “Sports Saturday,” where all the independent sports films will screen and special interactive community events will take place with opportunities to meet sports stars, filmmakers and actors.

“Filmmakers have long been captivated by the compelling storytelling inspired by sports,” said Jane Rosenthal, Tribeca Film Festival co-founder. “By combining forces with ESPN, the world’s leading sports media brand, we will not only serve passionate sports fans but build new audiences for sports filmmakers and their films, on a national and international basis, at the festival as well as on a year-round basis.”

A week later on December 11 ESPN announced: ESPN had reached a multimedia agreement for the domestic and international rights for UEFA European Football Championship™ 2008, Sat., June 7 – Sun., June 29, from Austria-Switzerland, it was announced today by Russell Wolff, executive vice president and managing director, ESPN International, and Philippe Le Floc’h, director, marketing and media rights, UEFA. Under the deal, ESPN’s U.S. domestic television networks will provide exclusive coverage of all 31 matches of the quadrennial tournament – featuring the top 16 European national soccer teams – including Spanish-language telecasts on ESPN Deportes.

Like other recent ESPN rights acquisitions, the agreement provides access to extensive content that will fuel ESPN’s multimedia assets and ESPN International networks. These include ESPN.com, ESPNSoccernet.com, ESPNDeportes.com, ESPN360, Mobile ESPN Publishing, and other ESPN distribution platforms. Additionally, in-progress and post-match highlights can be featured across key ESPN outlets. Outside the United States, rights include telecasts in Canada and Latin America—not including Brazil.

The EURO 2008 deal extends ESPN’s long-standing relationship with UEFA – the Union of European Football Associations, the governing body of football on the continent of Europe. In May, ESPN renewed its agreement with the organization through 2009 for the comprehensive rights to the UEFA Champions League™ matches, the world’s premier international club competition. ESPN and ESPN2 combined to present 12 EURO 96 matches from England and ESPN International featured all 31 matches.

“This deal underscores ESPN’s worldwide commitment to soccer and embraces the multimedia future of the sport," said Wolff. "Coming off its best tournament in 2004, the UEFA European Championship™ has become a must-see soccer event in the world. We are proud of ESPN’s multiple platforms and multiple territories–merging domestic and international linear networks with new media platforms to reach fans wherever and however they consume sports. This coverage will take the event to higher levels of exposure and growth.”

Le Floc’h added, “UEFA welcomes ESPN’s continued commitment to European football.
We are delighted with the opportunity to keep cooperating with a long-standing partner and are confident that the excellent platform offered by ESPN in both North and South America will help UEFA EURO 2008 ™ to further enhance the football experience of millions of fans. UEFA is enthusiastic about having accomplished the nationwide distribution in the US of the entire tournament."

Clearly ESPN is buying content, content they can distribute over their 15 different media platforms. In an era where content remains king, ESPN fully understands how important content is to their growth.

Media remains an advertising driven business. The more products you have to sell (assuming you have content that can attract an audience and advertisers) the more revenue you can generate. The single best example of how big a media empire ESPN has evolved into are the ratings for Monday Night Football. A year ago when ESPN agreed to pay the National Football League $1.1 billion a year for the rights to Monday Night Football (and no NFL playoff games or Super Bowls) many media pundits wondered if ESPN had made the biggest investment mistake in cable television history. Wonder no more, Disney, ESPN’s parent company made one of the best decisions in their long history.

Monday night's 34-16 victory by the Indianapolis Colts over the Cincinnati Bengals on ESPN's Monday Night Football earned an 11.2 rating, representing an average of 10,327,000 homes (14,218,000 viewers, P2+). Monday night ESPN was the most-watched network - cable or broadcast - in primetime last night among households, viewers and all key male and adult demo groups. The game was simulcast on local over-the-air channels in Indianapolis (16.6 rating) and Cincinnati (18.0 rating), boosting ESPN's audience to an estimated average of 10,700,000 households. The total also includes those viewing in high definition on ESPN HD.

NFL Season to Date

* MNF on ESPN is averaging a 10.0 rating and 9,224,000 homes (12,402,000 P2+) for 16 games in 15 weeks. These represent increases of 41%, 43% and 42%, respectively, compared to the first 15 weeks of last year's ESPN Sunday Night Football (7.1 rating, 6.444 million homes, and 8.733 million viewers).

* ESPN leads all networks - cable or broadcast - in delivery of all key male demos on Mondays in primetime: men 18+, men 18-34, men 18-49 and men 25-54.

* ESPN leads all cable networks in overall household delivery in primetime (an average of 2,480,000 households throughout the week).

* Last week, for the 16th consecutive week, the network led all cable networks in delivery of adult men on a total day basis (since the week of August 21), as well as men 18-54.

* ESPN's 16 MNF games so far are cable television's largest 16 household audiences of the year.

"Monday Night Surround" on ESPN.com

Online, ESPN.com's NFL and "Monday Night Surround" content viewed on computers and wireless devices generated more than 20 million page views Monday, up 56% over page views last year according to Web measurement tool HitBox. In addition, there were 2.8 million views of pro-football-related videos on ESPN Motion and ESPN360 on Monday (through Tuesday at noon).

Former Disney CEO Michael Eisner was a strong believer in ‘synergy’. In ESPN’s case the last three weeks have been all about Eisner’s synergistic business philosophy, building your business while maximizing the opportunities you’re investing in.

What’s even more interesting last week ESPN made it clear what ‘was’ regarded as their only bad decision of 2006, their failed launch of ESPN Mobile won’t stand in the way of ESPN creating content for mobile phone technology. ESPN launched ESPN Mobile with much fanfare during Super Bowl XL in Detroit. In August, ESPN admitted ESPN Mobile wasn’t working and said they’d end the service on December 31. ESPN Mobile might end on December 31, but that won’t stop ESPN from generating money from the mobile phone industry.

"We simply recognized quickly that we needed to adjust our business model and that's what we're preparing to do," said George Bodenheimer, president of ESPN and ABC Sports and co-chairman of Disney Media Networks. "You'll see an announcement from us relatively shortly on that."

"The Mobile ESPN application is going to be available to fans, just in a different method than how we started out," he told Reuters.

Monday, Anheuser-Busch told NASCAR officials they would end their current title sponsorship Tier II racing series after the 2007 racing season. NASCAR was quick to react, saying not only are they ready to take their number two racing series to the market, but they’ll do with ESPN as their partner.

"We didn't feel like we needed to make a big announcement on it, but we felt it was important to alert NASCAR that we were not going to renew after '07 as a courtesy of our long-term relationship," said Tony Ponturo, vice president of global media and sports marketing for Anheuser-Busch. "We wanted to give them time to consider and look for a new sponsor."

"No one could come up with another example of league and broadcast partner selling a sponsorship," NASCAR's director of business communications, Andrew Giangola announced. "We will be enjoined to find the right series sponsor to support our efforts and elevate the series."

With the growth of the Busch Series in recent years, coupled with the brand loyalty shown by NASCAR fans, NASCAR believes it made perfect sense that NASCAR and its broadcast partner be involved in the title sponsorship process.

"The Busch Series will have more of a presence on ESPN, so we're going to be looking for a national brand that's going to promote the series," he said. "The Busch Series is an extremely strong motorsports property. It's a significant opportunity for a company to gain $100 million in brand exposure. It's a unique situation, because the company is literally branded to the sport."

ESPN (an acronym for the Entertainment and Sports Programming Network) founded by Scott Rasmussen and his father Bill Rasmussen, and launched on September 7, 1979 under the direction of Chet Simmons, who was the network's first President and CEO.

Just before ESPN launched, Getty Oil Company (later purchased by Texaco, now ChevronTexaco) agreed to buy a majority stake in the network. Nabisco and Anheuser-Busch also bought minority stakes.

In 1984, ABC Video Enterprises, a division of the American Broadcasting Company, bought 80% of the network, and the Hearst Corporation bought the other 20%. That basic arrangement has continued, although ABC is now owned by the Walt Disney Company.

In 2006, ESPN took over all of ABC Sports' broadcast operations and programming, now known as "ESPN on ABC."

The first show was a slow-pitch softball game that aired on September 7, 1979. A few hours later came the first SportsCenter, which had no highlights and audio difficulties during an attempted interview with University of Colorado head football coach Chuck Fairbanks.

To help fill 24 hours a day of air time, ESPN aired a wide variety of sports events that broadcast networks did not show on weekends, including Australian Rules Football, Davis Cup tennis, bowling, professional wrestling, boxing, and additional college football and basketball games. The U.S. Olympic Festival, the now-defunct competition that was organized as a training tool by the United States Olympic Committee, was also an ESPN staple during this time.

Even before ESPN began telecasts, it convinced the NCAA to grant it rights to show early round games of the NCAA Men's Division I Basketball Championship. The game broadcasts were extensive and helped college basketball gain a larger audience.

The seminal moment in ESPN history dates back to 1987, when ESPN acquired National Football League rights for the first time. Initially ESPN and TNT shared Sunday Night Football rights. ESPN was a part of Sunday Night Football for 19 years before switching to Monday Night Football this year.

In 1990, ESPN added Major League Baseball to its lineup. MLB games are still on ESPN today and are scheduled to continue through 2011. The National Basketball Association (along with TNT) are the NBA’s national television partners.

In 1993, ESPN2 was founded, with Keith Olbermann and Suzy Kolber launching the network with SportsNite. Three years later, ESPNEWS was born, with Mike Tirico as the first anchor. (Today, Tirico is play-by-play announcer on Monday Night Football.) In 1997, ESPN purchased Classic Sports Network and renamed it ESPN Classic. The latest ESPN network in the U.S., ESPNU, began on March 4, 2005.

More than 90 percent of American homes have access to ESPN and ESPN2 – that’s the essence of brand power. Overwhelmingly ESPN isn’t complacent and refuses to stand still. If you’re a sports league and you haven’t aligned your sports property with ESPN those involved with that sports property have to wonder about the long-term viability of their entity. ESPN doesn’t have a monopoly on sports, but at the end of the day if you’re not a part of ESPN, you’re not going to reach the audience you need to reach if you hope to see your league grow.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: Wikipedia.

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