Disney is about to make a huge bet on TV sports — when sports looks riskier than ever — and it will do it without its top sports exec.
Last week, Disney announced a $52 billion deal to acquire most of the Fox empire. Now it says it will move forward without one of its key executives: ESPN President John Skipper, who has had the top job at Disney’s powerful sports network since 2012, is stepping down, citing “substance addiction.”
We’ve seen a bunch of big-deal media executives start to head for the exits recently, but this one is different: ESPN is both one of the most important properties in the media world and one whose clout and importance — once unquestioned — is very much up for debate.
But Skipper, who had re-signed a deal this year that was supposed to keep him at ESPN through 2021, presumably felt he could make a go of it.
Over the next three months, Skipper will be replaced by his predecessor George Bodenheimer. Whoever Disney CEO Bob Iger taps as ESPN’s permanent boss will face significant challenges, both immediately and down the road.
Near-term: Next March, ESPN is scheduled to launch ESPN Plus, its repeatedly delayed digital subscription service. While Iger has played up the launch as part of his strategy to bring Disney products directly to consumers, ESPN executives have privately worried that the service will underwhelm consumers, since it won’t have any of the big-ticket sports ESPN runs on linear TV. It also won’t have any of the lesser-ticket sports ESPN currently carries on its ESPNWatch digital platform, which it provides to pay TV customers.
Instead, ESPN Plus will carry … something else. Think pro tennis and small-school college sports. Managing expectations and reality for this one will be difficult no matter who is in charge.
Long-term: Over Skipper’s five-year run, ESPN laid out billions of dollars for sports rights for leagues like the NBA, in an effort to solidify its status as the dominant sports network — and to freeze out would-be challenges from Rupert Murdoch’s Fox and Comcast’s NBC. Those deals did indeed give ESPN nearly full control of sports TV. But it also left the network exposed as cord-cutting and cord-nevering eroded its subscriber base, and the revenue that base produced through affiliate fees and advertising.
ESPN has been trying to deal with some of those effects via a series of layoffs, while insisting it was still going to invest in talent.
But that hasn’t been enough to shore up long-term trends working against ESPN and TV in general. And the erosion has been substantial enough that ESPN had begun to re-think its lets-buy-all-the-sports-all-the-time strategy.
It has even started to mull the notion of living without the NFL. ESPN has a deal to air “Monday Night Football” through 2021, but faced with the prospects of drooping NFL ratings, coupled with cash-rich tech competitors like Amazon, the network has been imagining what life would like without Monday night games, or any other pro football deals.
On the other hand, Disney’s Fox deal contemplates betting even more money on TV sports, by acquiring Fox’s 22 regional sports networks. If regulators sign off, Disney would end up with exclusive deals — and the accompanying bills — to show local games from 44 pro sports franchises.
The operating theory seems to be: Even in a world where pay TV is a much smaller business, sports will be a crucial part of that business, so why not own as much as possible?
That’s now a question for someone other than Skipper to answer.
I talked to Skipper about some of the challenges he was facing in an extended interview at Recode’s Code Media conference in 2016. You can read a transcript of that conversation here, or watch the whole thing below:
Recode – All Go to Source
Author: Peter Kafka
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