Ops, ESPN Debate Value Of ESPN 360

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Orlando – The new chairmen of two small-operator trade groups Wednesday were critical of the pricing for ESPN 360, which an executive for the sports network defended as necessary to support a broadband product with robust and unique content.

Steve Friedman, the new chairman of the American Cable Association and Wave Broadband’s chief operating officer, and Jerry McKenna, the newly named chairman of the National Cable Television Cooperative and senior vice president of Cable One, raised issues about ESPN’s broadband service and its cost to operators during a breakfast panel on new-revenue opportunities at The Independent Show.

At the breakfast, sponsored by Multichannel News and moderated by editor-in-chief Mark Robichaux, panelist David Preschlack, executive vice president for Disney and ESPN Networks affiliate sales and marketing, talked about “being maligned by some” for including the company’s distribution partners in its financial model for ESPN 360.

He said the sports giant had made a deliberate decision not to take that content, ESPN 360, directly to consumers, and that it can be a differentiator for operators to increase their high-speed business.

But Preschlack’s remarks sparked a quick response from Friedman, who claimed that ESPN’s pricing model for ESPN 360 essentially was not workable.

Operators who carry ESPN 360 must pay a fee for it based on all their high-speed data customers, not just those who want it or use it, according to several operators.  

 “We don’t carry it,” Friedman said at the panel. “I’m not sure we’re going to down the road. Basically, this is the same model that we have to face with their [ESPN’s] video programming. I have over 100,000 high-speed data customers. I have to pay for every customer regardless of whether they care about ESPN or not. Paying for it would have as much of an impact on my margins on high-speed as anything else I do. That I can’t afford to do, and I won’t do that.”    

Friedman suggested that ESPN use a revenue-sharing model with distributors for ESPN 360.

Joking that he would try to act like “Solomon,” since he was sitting between Friedman and Preschlack, McKenna pointed out that services such as ESPN 360 do use a lot of an operator’s bandwidth.

“I tend to be consistent with Steve,” McKenna said. “We need a model if we’re going to carry a product that uses a lot of our bandwidth, and bandwidth is getting more and more expensive, then it’s got to be win-win for us in terms of offsetting those costs. I think that’s imperative, at least from our standpoint.” 

In response, Preschlack defended the pricing model for ESPN 360, saying it’s necessary to justify ESPN making the investment it is in its broadband offering.

“We need to have the business model such that we can put the best quality product forward,” he said. “Without it, the product that you see today doesn’t really exist. It’s difficult slash impossible to do that.”  

The service offers 3,500 live events a year, with 60% of them exclusive to the service, and the current pricing schedule to operators is necessary to support all that content, according to Preschlack.

He also said that ESPN 360 has won the support of cable operators, even smaller ones.

“We have about 30 deals, and I want to say half of them are with small operators,” Preschlack said. “We’ve got deals that represent north of 40% of the broadband marketplace.”

He added that June was ESPN 360’s highest-rated month in terms of usage and time spent, with people spending up to 80 minutes on the product.

“We like the model just the way it is and it’s working well just in terms of our ability to put the best product forward to our fans,” Preschlack said.

“The ability to partner with distributors – large or small, in terms of growing their data business, and to use content as a way to drive the business, as opposed to having data providers compete on price, I think it is a trend,” he said. “Anything we can collectively do to stop that is good for both of us.” 

Asked about his takeaway and best idea coming out of the show, where Preschlack had just arrived to participate in the panel, he quipped, “Considering I’ve been here about two hours, I think the best idea I heard is how excited Steve and Jerry are to launch ESPN 360.”

His remark sparked laughter from the audience.

During the panel, operators also talked about dipping their toes into the wireless business. Wave Broadband, for example, has created local WiFi networks in several communities, such as one near a ferry dock in the Seattle area, according to Friedman.

In the case of Cable One, it has bought wireless spectrum in its markets for about 85% of the subscribers it serves, according to McKenna.

“We have that, we did it partially for offensive reasons, partially for defensive reasons, and one of our chief technology officer’s challenges now that he’s working on now is how do we use this spectrum, and how can we most economically use it,” McKenna said.

Ops, ESPN Debate Value Of ESPN 360

Friedman, McKenna debate Preschlak Over Broadband Service

By LINDA MOSS

Orlando, Fla. – The new chairmen of two small-operator trade groups Wednesday were critical of the pricing for ESPN 360, which an executive for the sports network defended as necessary to support a broadband product with robust and unique content.

Steve Friedman, the new chairman of the American Cable Association and Wave Broadband’s chief operating officer, and Jerry McKenna, the newly named chairman of the National Cable Television Cooperative and senior vice president for Cable One, raised issues about ESPN’s broadband service and its cost to operators during a breakfast panel on new-revenue opportunities at The Independent Show.

At the breakfast, sponsored by Multichannel News and moderated by editor-in-chief Mark Robichaux, panelist David Preschlack, executive vice president for Disney and ESPN Networks affiliate sales and marketing, talked about “being maligned by some” for including the company’s distribution partners in its financial model for ESPN 360.

He said ESPN had made a deliberate decision not to take that content, ESPN 360, directly to consumers, and that it can be a differentiator for operators to increase their high-speed business.

But Preschlack’s remarks sparked a quick response from Friedman, who claimed that ESPN’s pricing model for ESPN 360 essentially was not workable.

Operators who carry ESPN 360 must pay a fee for it based on all their high-speed data customers, not just those who want it or use it, according to several operators.  

 “We don’t carry it,” Friedman said at the panel. “I’m not sure we’re going to down the road. Basically, this is the same model that we have to face with their [ESPN’s] video programming. I have over 100,000 high-speed data customers. I have to pay for every customer regardless of whether they care about ESPN or not. Paying for it would have as much of an impact on my margins on high-speed as anything else I do. That I can’t afford to do, and I won’t do that.”    

Friedman suggested that ESPN use a revenue-sharing model with distributors for ESPN 360.

Joking that he would try to act like “Solomon,” since he was sitting between Friedman and Preschlack, McKenna pointed out that servicex such as ESPN 360 do use a lot of an operator’s bandwidth.

“I tend to be consistent with Steve,” McKenna said. “We need a model if we’re going to carry a product that uses a lot of our bandwidth, and bandwidth is getting more and more expensive, then it’s got to be win-win for us in terms of offsetting those costs. I think that’s imperative, at least from our standpoint.” 

In response, Preschlack defended ESPN’s pricing model for ESPN 360, saying it’s necessary to justify ESPN making the investment it is in its broadband offering.

“We need to have the business model such that we can put the best quality product forward,” he said. “Without it, the product that you see today doesn’t really exist. It’s difficult slash impossible to do that.”  

The service offers 3,500 live events a year, with 60% of them exclusive to the service, and the current pricing schedule to operators is necessary to support all that content, according to Preschlack.

He also said that ESPN 360 has won the support of cable operators, even smaller ones.

“We have about 30 deals, and I want to say half of them are with small operators,” Preschlack said. “We’ve got deals that represent north of 40% of the broadband marketplace.”

He added that June was ESPN 360’s highest-rated month in terms of usage and time spent, with people spending up to 80 minutes on the product.

“We like the model just the way it is and it’s working well just in terms of our ability to put the best product forward to our fans,” Preschlack said.

“The ability to partner with distributors – large or small, in terms of growing their data business, and to use content as a way to drive the business, as opposed to having data providers compete on price, I think it is a trend,” he said. “Anything we can collectively do to stop that is good for both of us.” 

Asked about his takeaway and best idea coming out of the show, where Preschlack had just arrived to participate in the panel, he quipped, “Considering I’ve been here about two hours, I think the best idea I heard is how excited Steve and Jerry are to launch ESPN 360.”

His remark sparked laughter from the audience.

During the panel, operators also talked about dipping their toes into the wireless business. Wave Broadband, for example, has created local WiFi networks in several communities, such as one near a ferry dock in the Seattle area, according to Friedman.

In the case of Cable One, it has bought wireless spectrum in its markets for about 85% of the subscribers it serves, McKenna said.

“We have that, we did it partially for offensive reasons, partially for defensive reasons, and one of our chief technology officer’s challenges now that he’s working on now is how do we use this spectrum, and how can we most economically use it,” McKenna said.

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