Content

Meet ESPN’s New Skipper

5/21/2012 12:01 AM Eastern

With the dawn of 2012, The Walt Disney Co. placed day-to-day leadership of its most profitable unit, ESPN
Inc., in the hands of John Skipper, who had served as the sports giant’s content chief since 2005. Skipper, 55,
who joined ESPN as senior vice president and general manager of ESPN The Magazine in 1997 and, before
that, headed The Disney Publishing Group, succeeded George Bodenheimer as president of ESPN and ABC
Sports and co-chair of Disney Media Networks.

In a wide-ranging interview with Multichannel News online news editor Mike Reynolds — one of his first since assuming the
top spot — the affable Skipper discussed the worldwide leader’s position in the multichannel universe; its license fee, a source
of envy and enmity; the role of WatchESPN, its TV Everywhere gambit; where the company stands on an array of rights; the
increasingly competitive sports landscape; and his goal to grow market share.

MCN: Has the transition been what you expected? You
worked closely with George for many years, but being in
the seat, how different is it?


John Skipper: Well being in the seat is very different,
but to answer the first part of your question about how
has the transition been relative to the expectations, it’s
actually been spectacular. I mean I couldn’t be more
gratified by the support I’ve gotten from all the people
at ESPN.

If you look at ESPN from the outside, I think you would
probably agree with the proposition that we have very
stable and strong senior management. You’d probably
agree that our business is very stable. It’s a very logical
business plan that’s been developed over a lot of years.
Our core values have been very consistent. So I don’t have
to change anything dramatic, I don’t have to fix anything
dramatic …

I don’t want to say it’s been easier, because I don’t want
to undercut the sort of level of responsibility or the profundity
of the responsibility, but it certainly has been, I
think, pretty seamless. I mean there have not been any
big bumps or any huge surprises or unpleasantness. Our
business has remained sound, and we’re going to have a
very good year.

MCN: What role do you think ESPN has played in the
growth of sports in American culture, that many folks
want to be in the conversation on a day-to-day basis?


JS: I know we say it over and over, but it actually is genuine:
We have been well-served by the focus on serving
sports fans. And it is a prism through which we always
think about how we make decisions. If you think about
the arc of the company from the presentation of 24/7
sports, the idea that, gee, sports fans care about sports
all the time, and the idea then that we create multiple
channels, multiple platforms across all devices so that
you could, with a lot of networks, a lot of platforms, you
can get what you want when you want it.

And I do think all of that work has created a relationship
between ESPN and the sports fan where we are — and
you’ve seen all the research — we are clearly the preferred
brand. If you ask any sports fan, where would you like to
watch this? “ESPN.” Who do you trust the most? “ESPN.”
Who has the best line of programming? “ESPN.”

Having said that, and given the prominence of ESPN in
the sports landscape, we understand that, appropriately,
we are scrutinized to a level we’ve never been scrutinized
before and that we have a responsibility to try to continue
to uphold standards, to treat people fairly.

MCN: Many are passionate about sports, but others say:
‘Hey, I don’t care about sports and why am I paying for
ESPN on my cable bill?’ ESPN has the largest monthly
subscriber license fee in basic cable, about $5 a month.
What do you say to those folks in terms of the value
that you guys bring to the multichannel equation?


JS: I don’t think anybody disputes that we bring the
most value of any single channel, and we are the clear,
No. 1 choice among men as their favorite channel. I
think consistently in surveys of distributors we provide
the most value, and they acknowledge that. Ultimately,
they acknowledge it in the deals we do.

There is a lot of discussion about the rate, of course, but
it is a negotiated rate. It’s not a mandate; it’s not a subsidy,
as one of my competitors once called it; it’s not an annuity.
It’s an amount of money which we think we earn every
month. I am sure you can find somebody somewhere who
doesn’t watch it, but this notion that it’s a large number is
just not true. Some 120 million watch ESPN in some way,
shape or form every week.

MCN: Every week?

JS: So, we’re not a niche channel. And sports is disproportionately
important to the whole proposition of pay
television. Everybody would acknowledge we’ve been
very important in creating the
whole environment. We have
the most valuable programming.
We pay the most for our
programming. We’re not doing
reality series that you can do
for X number of thousands of
dollars an episode. Everybody
sees what our NFL deal costs,
what our NBA deal costs, the
quality of our production, what
we do in South Africa around
the World Cup or what we’ll do
in Europe around the European championships. We provide
the most value.

And I think, again, if you look at the fact that we recently
did very quiet, non-disputatious deals with Comcast
and Time Warner Cable … We did long-term deals,
so that has to be an acknowledgement that you’re providing
this level of value, and we acknowledge that and we
don’t take that lightly.

MCN: That value has extended on the technology side …

JS: We are still trying to be the most valuable partner in,
for instance, continuing the current business model, right?
I mean the whole WatchESPN application is all about making
sure that you have to have a pay television subscription
before you get any of our content on whatever device. We
have never given away our content. We have always been in
lockstep with our distributors that you pay us, we’ll provide
you a lot of value and there is no end-around.

NBCUniversal, I think, has put a big marker in the
ground with the Olympics, which I applaud. Which is,
you’re not getting this unless you have a pay television
subscription. You have to be authenticated. We think that
sports are the best antidote to cord-cutting, and our intention
is to help our partners there.

MCN: Is authentication the ethos of what the pay
television community is becoming and will be going
forward?

JS: Yes. I think we think it’s the model going forward.
Now, we’ve got some work to do. [WatchESPN] is available
to 40 million households right now. We need to work
with Time Warner Cable, with [Verizon Communications]
and with Comcast and in future deals with our
other partners to make sure we can help people authenticate,
download the application and, at that point, they
can watch our networks across all platforms.

MCN: You seem to be tying WatchESPN to bigger contract
negotiations? Or are you out there in the marketplace
looking at WatchESPN deals even if your current
contracts aren’t quite due?


JS: We are in the market talking to all of our partners
about WatchESPN. We have, to date, wanted to do deals
that included WatchESPN in a larger deal. We have not
sold it as a one-off , and that will continue to be what we
want to do.

MCN: Cox, Charter, the NCTC — are they next in the
negotiation cycle? Where do we stand with some of the
distribution deals?

JS: I’m prohibited from telling you exactly when these
deals are. If we have done deals with certain people, you
can certainly make the appropriate elimination that we
have discussions with the other guys.

And not very many years in the future, our expectation
is that we’ll have deals that include WatchESPN with
all of our partners. Every one of our partners would like
WatchESPN. I mean, we have had discussions; nobody
has said, “We don’t like the idea, we don’t want it.” Everybody
has said we’d like it. And we are currently engaged
with just about everybody who we don’t have a deal with
to have a discussion.

MCN: Is ESPN 3D slightly ahead of its time?

JS: Yeah, but that’s OK. We want to be leaders, we want
to be first; we benefited — whether it be HD or other
technologies, KZone, the first-down marker. We benefited from being the first and, in this case, it’s okay that
consumer adoption is a little slower than we expected.

MCN: How about the advertising market for sports?
Your upfront expectations?

JS: The marketplace is strong. The market for NBA is
very strong. The market for Major League Baseball is
very strong. We have good numbers to date coming up
for the ESPYs, Wimbledon.

Like everybody else, there is going to be some variability
based on the economy. Sports has held up well,
and I think we’ve held up well. It doesn’t mean that we
don’t understand that the market overall is a little fragile.
If you’re going to cut your budget, you’re not going to
cut your core properties, and we’ve held up pretty well
because of that.

MCN: Baseball: The national contracts are up after
the 2013 season. Your sense for the erstwhile national
pastime?

JS: Baseball is a very important property to us. Sunday
Night Baseball
is a beautiful product. The highlights are
great. Given the quantity of games and the time of year
they play, particularly once you get past the NBA Finals,
baseball has a pretty good run of six or eight weeks where it is clearly front and center. Given
what we talked about a little bit
before about our position with
fans, it’s very important to us.

Baseball is a very, very strong local
sport.

MCN: Absolutely.

JS: Th e RSNs are important to
baseball. We know that the Yankee
fan is going to watch, what,
150 to 155 games a year on YES
[and WWOR]. A lot of the passion
is about your hometown team.
And we think we play an important
role with Sunday Night Baseball,
Monday night, Wednesday,
SportsCenter, Baseball Tonight in
getting baseball to a national audience.
And, by the way, around fantasy.

So, we’ve got a good relationship. I think it’s public
knowledge that we are in a period of time in which
they’re discussing renewals. It’s our intention to remain
valued partners with baseball.

MCN: I’ll go a similar route with pro basketball. ABC had
its best year; ESPN matched its top delivery. There are a
lot of games, The Finals. NBA commissioner David Stern
says negotiations for the next contract start as soon as the
last deal is signed. Has that process begun in earnest?


JS: David is correct. You’re always sort of negotiating,
sort of selling. But we’re not in any official window;
there’s not any formal action.

MCN: Let’s talk about soccer. There were 1 million viewers
on ESPN on April 30 for Manchester City-Manchester
United. You guys got a lot of guys to
play hooky [that] day, John.


JS: Yeah. And I didn’t even see it. Th at
was on television. I don’t know what
we had on ESPN3. I suspect we had
another three or four hundred thousand
people on [ESPN3]. I think it’s
the biggest cable audience for the Premier
League. Th at’s pretty fun; that’s
pretty fun.

MCN: The Premier League rights bidding
will take place this summer. Is
Al Jazeera in there? I guess they have
the La Liga rights? You currently sublicense
those from GolTV. Where do you
stand, and is there anything you can
say about Al Jazeera?


JS: I don’t think the U.S. offering will be until the fall.
We, of course, love the Premier League. We have good
discussions with [chief executive] Richard Scudamore,
and it’s our hope to renew the Premier League and continue
doing it. There is not much more fun than waking
up on Saturday morning and putting on a game at 7:45
a.m. in HD.

MCN: It’s a good thing.

JS: Our fans have really responded to that and to the
afternoon games. So we would like to remain in that. Al
Jazeera? I have not spoken to Al Jazeera about the Premier
League.

MCN: Or La Liga?

JS: Or La Liga. I have not spoken to them. Look, they are
clearly a force to be reckoned with. In France, you saw
the power of what they can do. I can’t tell you that we
have any particular insight into their goals here …

We get a lot of questions about competition, and a lot
of those questions sound like, “Oh my gosh, you haven’t
had competition.” We have never done a deal where there
weren’t at least two bidders and sometimes four, five or six.
And we now are in a new world where it’s possible that Al
Jazeera will be one of those bidders. We will continue to
do business the way we’ve always done it. We want to have
as broad a collection of rights as possible but we’ll be disciplined
about what we can pay.

I do not have any intention of hiding my disappointment
about not having the World Cup in 2018-22. We love that
event, and it has been so much fun to see it grow from Germany
to South Africa to what I know we’re going do in Brazil.
It’s disappointing that run for us in the United States
— because we’ll have rights in other places — is going to
come to an end. But it’s business.

I also am not going to fall into the trap, which I don’t
think is appropriate, of suggesting that somebody else paid
too much for it. Fox has a soccer channel. Ultimately, at some
point you have to decide what something matters to you.
And they made what I assume is a rational bid for them.

Remember, it was a blind auction. You put a number on
a piece of paper, put it in an envelope, so you’re guessing.
And we guessed wrong. It happens with other people as
well. (Laughter.)

MCN: You guys just announced the worldwide rebranding
of your soccer brand. Since you traded out ESPN
Classic for ESPNU, the numbers have grown to 75 million
for U and dropped to about 33 million for Classic.
Is that a possible home for a soccer channel or another
linear iteration?

JS: We don’t have plans for that right now, for a linear
soccer channel. You’ve heard me talk about the Premier
League. We like the World Cup on ESPN and ESPN2, 3. We like the European Championships
on ESPN2 and 3.
And we like those homes. But
we don’t really have enough
soccer content to support a
24/7 channel. We’ll continue
to care about La Liga, Mexican
futbol, other Latin American
futbol. It’s very important
for ESPN Deportes. So we
want to accumulate soccer
product. We want to do studio
programming but we don’t
have any plans for a 24/7 network.

You asked about Classic.
We’ve been doing blocks
around the weekend for it to be
a fi lm channel, where we’re really
concentrating on the documentaries
and doing stunts
around contemporary events.
So baseball movies around
the opening of the season. We
might have a next act at some point, but not right now.

MCN: Obviously, you guys are the king of college sports,
my words, I don’t know if you guys would say that?

JS: Definitely not. (Laughter)

MCN: Where does U stand now, and how big is it going
to get?

JS: I think the upside for U is very high. We’re at about 75
million homes, we’ve just been in Nielsen ratings for about
a year, and it’s growing very quickly. We could accumulate
a big audience on U when we have the right game. Get a big
SEC football game on U, we get
an audience.

And a lot of it’s about shelf
space. College programming is
very important for us. What’s
important to our partners, and
we have significant deals with
the SEC, the ACC, the Big Ten,
the Big 12, the Pac-12 and the
Big East, not to mention about
25 other conferences. So what
we’ve tried to do with U is to create
more shelf space, another
appropriate home. So you’ve got
ESPN on ABC, ESPN, ESPN 2,
now U and now 3. Because with
all of this content, and particularly
with college football, which
is packed into most of the product
being on a Saturday, we
need more shelf space in order
to provide a national broadcast
for all of our partners.

MCN: Your new $15.2 billion pro football contract is the
largest in U.S. sports history. You pay so much more than
anybody else does for the NFL. Those 500 extra hours, all
those highlights, are they worth it in the grander economic
scheme of things?


JS: I’m going to directly answer that, but first, the setup
is that we look very different in terms of what we use
than everybody else. The overwhelming preponderance
of value for the other NFL partners is in the three-hour
windows. Overwhelmingly so.

For us, Monday Night Football clearly has enormous
value. It’s the highest-rated program in cable television;
that’s enormous value. But it is not the overwhelming
value. We think about multiple networks, mobile alerts,
highlights on ESPN.com, 500 additional hours of studio
programming, unlimited NFL highlights across our news
and information platforms. I mean if you watch our networks,
and I know you do, what we get from that NFL deal
is just dramatically different. So the answer to your question
is, yes. I actually think we probably derive, on a costspent
[basis], more value than anybody else. So while we
pay more, it’s not just a factor of, gee, they get X number of
three-hour windows and we get that plus a little bit more;
we get a lot more. It’s just not the same.

MCN: Speaking of that three-hour window, I think you
guys have a better schedule this year. But generally
speaking, NBC gets a better primetime schedule than
ESPN. Did you guys complain?


JS: There’s no whining in scheduling (Laughter). We
do not whine, we do not complain. It’s our job because
our contract does not provide us with specific
requirements for the schedule. The NFL provides us
with a schedule of games that is completely in compliance
with what we’ve purchased; we of course lobby,
cajole, point out the value of the Monday Night Football
brand and how important it is — it’s their brand,
by the way, which we’re licensing.

So yeah, we work really hard and the NFL this year, I’m
happy to say, they responded. We got two Denver games,
where we can feature Peyton Manning. We got three Chicago
Bears games. We got two New York Jets games. They
have a very hard job, right?

MCN: They do. Thursday Night Football, do you guys
want to play there?

JF: We love the NFL. Any other package of that product
that comes up, we will be interested.

September