An Entire Sports Programming Network - Essay Example

ESPN and SportsCenter Introduction ESPN (entire sports programming network) is first of its kind television network that has come to in large part dominate the sports media market. A subsidiary of Walt Disney, the network was the first to devote its entire programming to one subject – sports. Since its inception in the 1970s it has become the preeminent cable network in terms of advertising dollars in regional, national, and affiliate markets. This is in great part an element of the network’s ability to tap into the lucrative yet hard to capture cable market of young males. In addition to this ability to tap into this hard to capture demographic ESPN has been highly efficient in leveraging the sports media. Through instituting a fluid business model that has incorporated a diverse range of sport and market goals. Since the company’s origin, it has expanded from coverage of traditional sports such as baseball, football, and basketball, to exist at the forefront of the country’s interest in sporting, with such diverse coverage including the X-Games, Lacrosse, and high school and regional events. In addition to the expanding sports coverage, ESPN has expanded the medium of its expression through the incorporation of the sports reporting vehicle SportsCenter, as well as a ESPN the Magazine, and the ESPN.com website which has become a leader in online sports reporting. This research essay considers the means that ESPN has been able to leverage the cable media market through an examination of its historical trajectory and expanding business model. It considers both its internal and external means of change and expansion as well as how its business model has fundamentally changed since its 1970s inception. It also examines the means by which it can continue to expand and leverage the market into the 21st century. Leveraging the Market I. Early History Bill Rasmussen, at the time an unemployed sportscaster, was the individual responsible for first envisioning the ESPN Network. In 1978 Rasmussen was fired by the World Hockey Association where had had worked as a sportscaster and director of operations. His initial business interest was to develop a means of broadcasting University of Connecticut basketball through cable companies throughout the state of Connecticut. During this period satellite technology had recently emerged as a viable means of connecting signals to cable broadcasters throughout the region. The RCA Company had a number of underutilized satellites with which Rasmussen was able to broker a deal and lease time. Indeed, RCA had 6 transponder sites non-operational, making Rasmussen’s original request highly suitable. (Freemen 2002) Upon discussing his plans with RCA, Rasmussen discovered that it would be cheaper for him to lease out 24 hours instead of the 5 he had originally planned. In a sense, it was at this instant that ESPN was born and took its first steps towards leveraging the sports media market. Rasmussen quickly realized that it would be in his best interest to develop a 24 hour network that would broadcast nationally rather than limit the operation to the statewide broadcast of Connecticut basketball games. As RCA was primed for leasing the satellite equipment, Rasmussen was able to lease the necessary technology utilizing only his credit card. (Freemen 2002) On July 1st, 1978 he began leasing the space. At this time he referred to the network as Entire Sports Programming (ESP). It is claimed that the name was changed to the Entire Sports Programming Network (ESPN) when the company letterhead included the changed version, and employees merely adopted the newer version. In September 1979 ESPN broadcast its first programming. While SportsCenter debuted with the first network telecast, the programming was sparse by contemporary standards. Initially, the company signed with 625 cable affiliates. This meant that the network was broadcast to over 1 million homes that were cable subscribers (at the time the total number of potential homes that were connected to cable was 20 million). One of its first televised events was a slow-pitch world series softball game between the Milwaukee Schlitzes and the Kentucky Bourbons. Anheuser Busch was the network’s first sponsor, purchasing a then cable network record 1.4 million dollars in advertising. (Freemen 2002) As the programming was sparse and the network was in its infancy, programming was oftentimes broadcast numerous times to fill the large amounts of airtime. While there was a number of repetitive programming, the network also capitalized on its ability to broadcast events that received little media attention prior to the development of a 24 hour network. One of the most prominent during this first year of programming included the early rounds of the 1979 NCAA Basketball tournament. This tournament featured the games of Magic Johnson and Larry Bird, two athletes who would become synonymous with basketball in the 1980s, as well as the network itself. (Evey 2004) II. The 1980s: Becoming a Mainstream Sports Network The network’s infancy early sources of funding were derived from Getty Oil. In 1979, Getty Oil invested 10 million dollars into ESPN giving the oil company a controlling stock in the television network. Getty hired Chet Simmons, the former president of NBC Sports, to run the ESPN Network. In the opening years ESPN lost money, as the financing costs rose to near $25 million dollars. In an effort to gain a thorough understanding of market factors and to develop a long-term business model, Getty Oil hired the marketing consulting firm McKinsey & Co. McKinsey’s lead consultant was Roger Werner. Werner determined that if $100 million extra was invested in ESPN the company would become profitable in the upcoming five years. Following this initial estimate, Werner joined ESPN in an administrative function, operating in the roles of vice-president of finance, administration, and planning. He also contributed greatly to the company developing a new business model. (Evey 2004) When Roger Werner joined ESPN the company’s only source of revenue had come from advertising dollars. While ESPN’s 1.4 million dollar advertising contract from Anheuser Busch was a record at the time, it hardly sufficed the financial needs of a nationally functional television network. Werner’s first major operational change was to suggest charging cable affiliate operators small fees per cable subscriber. Werner determined that this figure would be 6 cents per subscriber and that it would gradually increase to 10 cents by 1985. While today this is common practice among cable companies, at the time it was a controversial move and a number of operators objected to the charges. It took a significant amount of convincing, of which the company’s then CEO Bill Grimes, who had replaced Chet Simmons in 1982, contributed in great part. During the same time Simmons was replaced by Grimes, Werner was promoted to senior vice president. Also around this time, the CBS Cable Channel went under. Grimes and Werner used this as an opportunity to argue that Cable Company’s would not be able to function if they were not able to institute a policy of subscriber fees. They were successful in convincing close to half of all cable operators to agree to the new fees. (Evey 2004) As soon as 1983 only five years after its inception, ESPN had become the largest cable networking channel. They had leveraged the market to encapsulate a total of 25 million households (substantially greater than the 1 million homes they reached in 1979). With this enormous success ABC, Inc. became interested in the company and purchased a 15% share in 1984. In 1985 they took control the network. While the network had experienced excellent growth during its infancy period, as ABC, Inc. took control ESPN was given even more standing nationally. The ABC purchase would not only change ownership of the network but also give it the ability to expand at speeds company members never envisioned. ABC’s significant financial resources also gave ESPN the funding necessary for its substantial expansion over the upcoming years. (Evey 2004) Up until 1984 College Football on television had been a regulated enterprise. After the 1984 decision, ESPN began broadcasting College Football games on Thursday and Saturday nights. While ESPN had previously been viewed as a network of marginal sports and rabid fans, the inclusion of these College Football games showed a shift in demographics towards a more upscale demographic. This shift greatly contributed to the altering of perception among advertisers that ESPN was a mainstream and necessary element of the sports pantheon. In 1986, ESPN ventured further into upscale waters in announcing they would broadcast the America’s Cup yachting competition. This was a resounding success, with advertisers purchasing the over 60 hours of advertising space. (Evey 2004) Follow its acquisition by ABC, ESPN was able to land a number of contracts that significantly leveraged the market in its favor. The company acquired contracts with the National Hockey League (1985), National Football League (1987), and Major League Baseball (1989). These contracts marked ESPN’s alignment with the national consciousness and leveraged them as one of the primary players in sports broadcasting. In addition to these contracts, the company expanded into the international market. While it began broadcasting overseas in 1983, it was in 1989 that it first gained a substantial foothold in Latin America. In 1993 the company created ESPN Asia, and the same year that they began broadcasting throughout Europe with the Eurosport network. III. Market Expansion: 1990-1995 In the 1990s Steve Borstein replaced Roger Werner as president and CEO of ESPN. Borstein ushered in a new era of market expansion. He gradually moved the company towards further contracts with major sporting leagues, developing new networks, and further expanding the company’s global market share. One of Borstein’s first market leverage maneuvers occurred in 1991 when ESPN developed ESPN Radio in conjunction with the ABC Radio Network. Initially offering only 16 hours of programming per week and being featured in 200 radio stations, ESPN Radio quickly expanded and continues its significant market share in the present day. On October 1, 1993 ESPN introduced a second network – ESPN2 . ESPN2 was billed as the alternative sports channel, where more edgy or marginalized sporting events would find a broadcasting home. Throughout this period ESPN continued developing its market leverage through acquisitions of a number of sports related entities. The notable entities acquired include SportsTicker, a sports information news service that would come to supplement the regularly scheduled broadcasting. During this time ESPN also developed the Extreme Games – a sporting competition that included skateboarding, sky surfing, mountain biking and other extreme events. The name was eventually changed to the X Games. The X Games were a modest success that was supplemented by the merchandising that included a wide-array of shirts, CD’s, and posters. While ESPN was widely successful, this period also saw its first notable competition emerge with the competition from FOX Sports. (Smith 2009) IV. ESPN the Magazine ESPN the Magazine debuted in 1998. It was direct by John Skipper, the then director of publishing at Disney. It marked a significant move in ESPN further leveraging the media market, as the company’s only previous publication was the short lived Total Sports. The magazine gained quick success, attaining 400,000 subscribers, making it only second to Sports Illustrated for sports publications. It would also greatly influence and become integrated with ESPN.com, the web based internet publication devoted to sports coverage that would emerge as the premiere avenue of accessing sports news on the internet. Fig. 1 ESPN the Magazine The first 15 pages of ESPN: The Magazine reveals its contents and invites readers into a print version of the ESPN locker room. Before setting the tone for the magazine, the first two pages list the magazine’s contents. The first page lists the issue’s features and the second tells readers where to go for monthly columns, departments and straight sports coverage of specific leagues. On both content pages, each feature or department has a picture and blurb accompanying it. The photographs – action shots that showcase the athletes’ intense concentration or posed shots of the athletes looking tough – are almost always more descriptive than the blurbs. NFL quarterback Drew Brees scowl and NBA defensive specialist-cum-madman Ron Artest’s strongman pose tell readers as much about the articles as do the short, written descriptions. The visual emphasis of ESPN is very noticeable and has a simple explanation. The magazine’s readers are familiar with the network and SportsCenter and they’re attracted to images of sports, not just written descriptions of them. The magazine’s stress on images begins on the first page. The following 13 pages set the tone for the rest of the magazine. The magazine’s tone is directly lifted from SportsCenter, which has an expert, youthful, and somewhat goofy tone that is practically a network trademark. The simplest method the magazine uses to establish tone is to use well-known ESPN broadcasters as writers. “Stuart Scott’s Two Way,” in which the SportsCenter anchor answers fan mail, shares page four with the masthead. The January 2009 issue being the first since the NCAA football bowl games, six of the first 15 pages are devoted to the game. Once again the story of the game is primarily told with images. In six full pages, there are only two columns of writing and less than 1,000 words. With crisp, action-packed photos of the game’s pivotal moments, the text is left to add comic relief to the pictures. The article pokes fun at Ohio St. Coach Jim Tressel, saying he “thinks Eminem is a milk chocolate treat” and that the Buckeye quarterback, “who runs the 40 in a little under an autumnal equinox.” The combination of compelling sports images and wit-infused pop culture references and sports metaphors is exactly what fans of the ESPN network are used to, and when this TV audience turns into a group of readers, this familiar tone is exactly what they want. The remaining pages out of the first 15 set a seasonal theme for the issue. This being the January issue, that theme is expectations for the new year. A statistical department called “Do the Math” counts 10 dates in 2009 in which overlooked sports milestones were set. The segment’s final message? “On any given day of the sports calendar, something new is bound to happen.” A three-page segment called “Jump” includes a top ten list of the magazine’s predictions for 2010 and a timeline of the important moments in the history of the overtime period in sports, leading up to 2009 and speculation about what new overtime records might be set. Making the tone seasonal in the magazine’s first few pages gives the whole publication a sense of timeliness, which makes the content seem more urgent, relevant, and attractive to readers. There is one misplaced page, and that is Bill Simmons’ third page humor column, “The Sports Guy.” Bill Simmons is one of the best and funniest writers on the ESPN staff, but his column is the only copy in the first 15 pages that has sentences strung together and paragraph structure. It is the only page that has more text than graphics. No matter how good this column is, it disrupts the fast pace of the magazine, which is otherwise firmly upheld by relying on images to tell stories and short blurbs to humorously complement the pictures. Simmons’ column seems better suited for the back of the book. Swapping it with the last page in this issue, Dan Patrick’s “Outtakes,” would be a logical move because Patrick, like Stuart Scott, is a well-known SportsCenter anchor. Patrick’s column would serve the dual purpose of giving readers that TV feeling and keeping the pace in these opening 15 pages snappy. Reading ESPN: The Magazine is a lot like watching the channel. Fans of SportsCenter can read a magazine that looks and sounds just like the television show they watch every day. For the most part, the magazine successfully simulates the experience of watching sports TV, the ESPN way, and presumably, its readers like it that way. V. The Disney Era In the mid-1990s the Walt Disney Company acquired ABC, giving it control of ESPN. Disney combined ABC Sports and ESPN into a single entity. They acquired the Classic Sports Network (CSN) which became ESPN Classic. The company also expanded its contracts with major sporting networks and began broadcasting NFL games on Sunday Nights. ESPN’s contract with the NHL gave the company exclusive cable TV rights for broadcasting hockey games. Fox Sports continued to remain ESPN’s primary competition during this period, as their regional coverage aimed at every local market was successful in destabilizing ESPN’s market leverage, which was greatly concentrated in the national market. (Anthony 2009) Future Avenues for Market Leverage While ESPN has remained a highly innovate network there are still a number of means that must be instituted in continuing its dominance over the sports network pantheon. As the internet becomes increasingly prevalent the network must work to ensure that its ESPN.com extension advances to keep up with the pace of on-demand programming. The future will surely require higher levels of differentiation in terms of program choices, as evidenced by Fox News ability to gain market leverage through aggressive regional programming. For ESPN to stay as highly competitive as it has over the preceding decades it must work to reinvent the internet broadcasting model so that they do not allow Fox Sports to continue to gain market leverage. The 21st century and the advent of computer to television wireless technology will likely change the very means by which broadcasting networks operate. While ESPN was revolutionary in instituting a subscription fee per cable subscriber, future progress can be made in direct internet broadcasts, where users will pay a subscription fee directly to the corporation for the ability to broadcast directly from their computer to their television. This allows viewers more direct choice in programming options, and eliminates the overhead that is an essential element of broadcasting through cable services. Ultimately, it will be ESPN’s ability to adapt to the changing nature of internet technology that will determine if they remain as successful in the next 30 years as they have been in the preceding. References Evey, Stuart. (2004) Creating an Empire: ESPN - The No-Holds-Barred Story of Power, Ego, Money, and Vision That Transformed a Culture. Triumph Books. Freemen, Michael. (2002) ESPN: The Uncensored History. Taylor Trade. Smith, Anthony. (2009) ESPN: The Company: The Story and Lessons Behind the Most Fanatical Brand in Sports. Wiley. 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