ESPN3 Wins Over Small Ops

Broadband Service Gains Carriage Despite Pricing Gripe

By Mike Reynolds -- Multichannel News, 7/26/2010 12:01:00 AM

As small operators gather in Baltimore for the Independent Show this week, ESPN3.com continues to add affiliates from that constituency, whose leadership has been vocal in decrying the broadband service’s pricing structure.
Repositioned in 2007 to include more live events and rebranded on April 4 from ESPN360.com, ESPN3.com has recently scored deals with National Cable Television Cooperative members Sunflower Broadband, News Press & Gazette, Arvig Communications Systems and the municipal provider Frankfort Plant Board in Frankfort, Ky., as part of distribution push that has seen it more than double its affiliate base over the past year to 53 million subscribers in the U.S., two-thirds of the nation’s broadband homes.
Negotiations for ESPN3.com are also an integral part of parent The Walt Disney Co.’s negotiations with Time Warner Cable, as the content company’s deal with the No. 2 cable operator is set to expire on Sept. 2.
With usage up 112% overall and coming off its best-ever performance from a host of metrics with the 2010 FIFA World Cup, ESPN3. com is poised to present a bevvy of college football and basketball during the upcoming school year, as the broadband service continues to add live and exclusive content, including Atlantic Coast Conference pigskin action as part of ESPN’s multiyear, $1.9 billion deal with the conference.
ESPN executive vice president of content John Skipper, during the July 8 conference call announcing the new comprehensive TV and advanced platform rights package with the ACC, said he anticipates that a deal will be in place before the start of the 2010 football season. Time Warner Cable has a dominant presence in North Carolina and is also well-positioned in South Carolina.
David Preschlack, executive vice president, affiliate sales and marketing, for Disney and ESPN Media Networks, said the company is engaged in “ongoing conversations” with Time Warner Cable and that ESPN3 is “an integral part of the discussions extending on any number of fronts. Obviously, we want to get a deal done. We have a 30-year track record with Time Warner Cable.”
Asked if ESPN3 fare, featuring some 3,500 events in 2010, could wind up being part of a “TV Everywhere” element within a new comprehensive contract package, Preschlack said it was “too early to tell.” He emphasized the service’s importance to the company by invoking ESPN’s “best available screen” mantra from its upfront presentation in May. “Getting product to whatever platforms sports fans demand is a massive focus for us,” he said.
As to smaller ISPs, Preschlack said ESPN3 is on the “doorstep” of a deal with another NCTC member and continues to talk with other co-op companies, as well as the organization itself, about a deal for the service. A spokesman for NCTC, whose overall master deal with the sports programmer expires in a couple of years, confirms that discussions have occurred with ESPN about its broadband service.
With ESPN’s affiliate team negotiating directly with co-op members, Preschlack said some NCTC companies were part of the broadband service’s initial lineup and range from those as small as Minerva Valley, with 241 subscribers, to Windstream, with 1.1 million. He said that when all NCTC members broadband subs are accounted for, the co-op ranks behind Comcast, AT&T, Verizon Communications and Cox Communications as ESPN3.com’s fifth-largest affiliate.
“It’s been an incredible effort,” said Preschlack, who said the broadband service has deals with some individual 100 NCTC members.
Those ISPs aside, ESPN3.com also has deals with Charter Communications, Mediacom Communications, Insight Communications, Suddenlink Communications and RCN. Coupled with another almost 24.5 million students (21 million) and military personnel who receive the product free via .edu and .mil networks, ESPN3.com now stands as the sports programmer’s third-largest service, behind ESPN and ESPN2 and ahead of college sports network ESPNU, according to Preschlack.
ESPN3.com’s still growing roster is at odds with the stance of American Cable Association CEO Matt Polka, who at last year’s Independent Show railed against then ESPN360.com and its model, under which affiliates must pay a per-subscriber license fee for the service, even for subscribers who never access it.
Last week, Polka again expressed ACA’s opposition to the structure and the organization’s wont to contain broadband costs.
“The Walt Disney Co.’s refusal to have a direct financial relationship with just those consumers that actually want to watch ESPN3 on the Internet is a scheme to force millions of people to pay for content they don’t want,” he said. “Blocking big media companies like Disney from imposing a costly and inefficient cable programming business model on all broadband subscribers is clearly an important matter for the FCC to take on.”
Polka continued by saying that if “Disney’s anticonsumer act ions are not stopped, the cost of a monthly broadband subscription will rise for everyone, people on the low end of the income scale will be less able to afford broadband at all, and ACA members and other network owners will have less capital to extend broadband technology to the 14 million to 24 million Americans who the FCC says have only a dialup connection to the ’Net.”
Preschlack countered by noting that [NCTC and ACA] “members have decided the other way in droves. I can only guess that [Polka] is trying to negotiate a better price.”
Sources peg the monthly license fee for ESPN3.com at between 7 cents and 10 cents per subscriber. Preschlack and other ESPN officials would not comment about pricing.
In addition to college football, basketball and other collegiate sports, ESPN3.com this summer and fall will offer the U.S. Open tennis championships, FIBA World Championships, the Little League World Series, plus a host of soccer properties, including action from the Portuguese league; Italy’s Serie A and Copa Italia; the German Bundesliga; and Spain’s La Liga and Copa del Rey.
At the recently concluded 2010 FIFA World Cup in South Africa, ESPN3.com kicked around some impressive numbers: 54 live matches were viewed by 7.4 million unique viewers, who generated 942 million minutes of viewing or more than two hours per unique. The 54 live matches that were available were viewed by an average of 114,000 persons per minute, with the live Spain-Germany semifinal watched by 355,000 people per minute, ESPN3.com’s largest average audience ever.

Vital statistics on ESPN3.com:

Launched: 2001 (as ESPN Broadband)
Total subscribers: 53 million
NCTC affiliate subscribers: 4.2 million
Recent affiliates: News Press & Gazette, Sunflower Broadband, Frankfort (Ky.) Plant Board
Usage: Up 112% in 2010 from 2009
SOURCE: ESPN