Taking the Field - Multichannel

Taking the Field

ESPN’s James Pitaro opens up about overhauling the franchise, taking on Silicon Valley giants for marquee sports rights and the new direct-to-consumer future
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ESPN president James (Jimmy) Pitaro

ESPN president James (Jimmy) Pitaro

When ESPN President John Skipper abruptly resigned this past December, a frenzy of speculation erupted over who would take over cable’s leading television sports brand in the most critical juncture in the network’s nearly 40-year existence.

Enter The Walt Disney Co. digital executive James (Jimmy) Pitaro. A self-proclaimed sports aficionado and lifelong baseball fan, Pitaro cut his sports teeth as head of Yahoo! Sports during the 2000s, prior to his being named co-president of Disney Interactive in 2010 and then ascending to chairman of Disney Consumer Products and Interactive Media in 2016.

In the five months since he took the ESPN reins, Pitaro has quieted the naysayers while putting his stamp on the programmer, both in front of and behind the camera, with a core mission of serving the sports fan across platforms.

Prior to Pitaro’s arrival, ESPN, like other cable networks, faced big challenges as the TV industry continued to adjust to the growing phenomenon of cord-cutting. The network has lost nearly 13 million subscribers since its peak in 2010, according to Sanford Bernstein media analyst Todd Juenger. Pitaro hit the ground running as the network geared up to help thwart those losses with a relaunch of its ESPN app and the debut of ESPN+, its first-ever direct-to-consumer subscription service.

Pitaro, along with Disney’s direct-to-consumer and international group, oversaw the April launch of ESPN+, the $4.99-per-month service that is expected to deliver more than 10,000 live sports events — including live games from the National Hockey League, Major League Baseball and UEFA Nations League soccer — to fans who want to watch their favorite events on multiple devices.

Pitaro in May added to the ESPN+ lineup with an exclusive TV rights deal with the youth-skewing UFC. Starting next year, ESPN and ESPN+ will have exclusive digital and linear rights to 42 live mixed-martial-arts events — 20 of which will be streamed on ESPN+.

“From a strategic point of view, Jimmy understood the potential of this partnership right away,” Mark Shapiro, co-president of UFC owner WME-IMG, said. “Throughout the process, Jimmy was focused on how we could get the deal done in a way that worked for both companies, allowing us to maximize value and collectively grow our brands and our audiences.”

Pitaro also laced up the boxing gloves to sign an unprecedented, seven-year exclusive TV deal with boxing promoter Top Rank that will provide ESPN and ESPN+ with 54 events per year featuring such high-profile champions as Manny Pacquiao, Vasiliy Lomachenko and Terence Crawford.

Top Rank president Todd DuBoef — whose relationship with Pitaro goes back more than a decade to Pitaro’s days at Yahoo! Sports — said the ESPN president has “sports DNA in his blood” that allows him to successfully navigate through the industry’s complexities.

Indeed, industry observers said Pitaro has already demonstrated a knack for negotiating rights with an eye on future distribution opportunities, while maintaining a business focus on the core ESPN linear product.

“Several years ago, the industry was talking about ESPN not being in the running for a number of sports properties, but now you’re looking at them bidding really aggressively again, because they’re not just beholden to the pay television arena,” sports television consultant Lee Berke said. “They need brand-name events, and the interesting part of the UFC deal is that the bulk of the events are for ESPN+, not ESPN.”

Under Pitaro’s oversight, the core ESPN network has also ticked up in the ratings. Primetime ratings were up 10% in second-quarter 2018, compared to the same period in 2017 — due mostly to strong ratings performances from the network’s NBA Playoffs coverage — and ESPN ranked as the top network in total day for the quarter in key male demos.

Pitaro has also sought to build stronger ties with sports rights-holders as he seeks partnerships to take ESPN into a multiplatform future.

National Basketball Association commissioner Adam Silver called Pitaro a “resourceful and innovative leader,” adding that he and the league are confident about its future relationship with the network. “We look forward to expanding on our strong partnership with ESPN with the benefit of [Pitaro’s] experience helping guide other iconic brands — such as Disney, Pixar, Marvel and Yahoo! — through a time of rapid change and disruption.”

Added WME-IMG’s Shapiro, “He approached the [UFC] negotiation with a fresh perspective on the industry and ESPN’s role in it as an innovator and a disruptor.”

Pitaro, honored as the Multichannel News Sports Executive of the Year for 2018, discussed his plans and aspirations for ESPN as well as the future of sports television in a wide-ranging interview. Here’s an edited transcript.

MCN: After five months at the helm of ESPN, do you feel like you’ve fully settled into the position?
James (Jimmy) Pitaro:
I had the opportunity to get to know many of the executives across the various leagues and many of the executives at our competitors that are still in their positions today, or in more senior positions. Many of the folks that hold these leadership positions I grew up with in the industry, so I had that going for me. Again, I’d also been at The Walt Disney Company for eight years, so regularly I would attend leadership meetings, annual planning meetings, budget meetings, strategy sessions, where I would have the opportunity to work closely and partner with various executives at ESPN. I sat right next to at first George Bodenheimer, and then after that John Skipper, and so I would speak with and meet with the two of them regularly.

As a result of all of those interactions, I had very good relationships with the folks at ESPN and, more importantly, I had a pretty good understanding of the challenges that the business was facing, as well as the opportunities. I was very fortunate in that when I started on day one I had a pretty solid understanding of the business and I had very strong relationships both with the ESPN leadership team and with the folks on the outside across the leagues.

MCN: You came in as many observers were writing the network’s obituary, given the network’s subscriber losses and the number of layoffs it had endured. There were also questions as to whether or not ESPN was going to continue to be aggressive on the rights acquisition front. Given all of that, what gave you the confidence that you were the right person to lead the network?
JP:
One of the biggest things I’ve realized since I’ve started is that there was a false narrative about this business. You know, the first thing I’d say is that morale is very strong here. We have a very energized, committed and passionate employee base. I spend a ton of time in Bristol and I will continue to spend the majority of my time here in Connecticut. What I’ve seen from day one is great optimism and a commitment to our to our mission statement, which is to serve sports fans anytime, anywhere. Certainly, from the outside looking in, that was not what I expected, even having the foundation that I mentioned before. But getting here and meeting with folks every single day, I will tell you that there is a ton of optimism here at the company and that’s not because of me, that’s because we have employees who are, like I said, very committed to our mission. So again, in terms of that false narrative, I certainly understand why it exists. But I will tell you I am I’m not experiencing that negativity or any of the tensions that you mentioned before since I’ve been here.

What I have noticed at the company is a commitment to giving back and contributing to society. The reason why I’m raising this is because we recently had the ESPY Awards, with its numerous honors, as well as the Humanitarian Sports Awards dinner in Los Angeles. I also had the great opportunity to attend an event at the 9/11 Memorial and Museum [in New York], where we partnered with the museum team to help open a new sports exhibit. They are focused on the power of sports to heal a nation after such an awful terrorist attack. We had several prominent sports figures on stage being interviewed by Mike Greenberg [host of the morning talk show Get Up!], and it was just a fantastic event that really couldn’t have happened without the contributions of the ESPN team. So it’s another example of the commitment that I’ve seen from the employees here in terms of giving back and contributing to society.

MCN: What was the first thing on your agenda when you got here in terms of creating your vision of the ESPN brand from a business standpoint?
JP:
Good question, but before I answer I just want to highlight one thing: There is a secular or an industry issue in terms of subscriber losses. Yes, I think people have focused specifically on ESPN, but the way I look at it’s really an industry issue … just in terms of cord-cutting and folks looking for alternatives to that traditional cable or satellite model. So, to answer your question, most important was giving the team clarity in terms of our mission, which as I said before has not and will not change — to serve the sports fan anytime, anywhere. In my opinion, that is just as relevant today as it has ever been. Giving them the clarity that we remain committed to serving the sports fan on traditional as well as new and emerging platforms, and doing it in an exemplary fashion through personalized products and services, is what remains our core focus and our core vision.

Then, what I thought was important was to give the team clarity on what our strategic business drivers would be for the foreseeable future. I laid out four — direct-to-consumer, audience expansion, quality storytelling and programming, and innovation.

MCN: Does your business strategy also include building stronger relationships with the network’s content partners?
JP:
Another example of one of the things I’m focused on is being proactive and reaching out to our league partners and letting them know what was important to me and letting them know where we were looking to take the business, as well as coming up with some ideas as to how we could in partnership grow their respective sports and their respective leagues. We’re making progress; we’re very pleased with some of the things that are happening on the NFL side. We love our Monday Night Football schedule and our Monday Night Football booth. [The new team of play-by-play announcer Joe Tessitore, analysts Jason Witten and Booger McFarland and field reporter Lisa Salters will debut this season.]

We love the fact that we have a postseason Wild Card game this year. We’re very happy about what we pulled off this year at the NFL Draft in Dallas, and I believe the league is also very, very pleased. So, you know, on the NFL side I’m feeling very positive. On the NBA side, we’re very fortunate to be partnered with a league that is clearly ascending, and we have contributed to and benefited from that ascension. I’ve known [NBA commissioner] Adam Silver for many, many years, and Adam and I are always talking about ways that we can build on and expand this partnership. As I said before, one of our core priorities is innovation. We’re always challenging ourselves to be more creative and more innovative in terms of how we cover our league partners. For example, in-arena production is a big focus of ours, as well as how we put together highlights and how we present those highlights to our fans.

On the baseball side, I’m a big baseball fan and have been for my entire life, so I have a lot of opinions on how to make baseball more appealing across our networks. Going back to my point on audience expansion as a core driver of our business, one component of that is making sure that that our brand and our products are speaking to our core audience but also to a younger generation. We’ve been talking to baseball in connection with a variety of different ideas on how to make the game more appealing, and we’re making some progress.

We’ve experimented a bit with miking players. We’re also starting to talk about various ways where we could partner with baseball to generate or create awareness and affinity for individual players.

MCN: Does the network’s recent acquisition of exclusive UFC TV rights play into reaching out to younger viewers?
JP:
I think a great example of that is that with the recent partnership that we’ve struck with the UFC. I’ve known [UFC president] Dana [White] for over a decade, and done deals with Dana in the past, and this is a league with a young audience — younger than the average audience on ESPN today. This is a league that is embracing innovation, is excited to try new things and to experiment. The deal is really going to help us, and we’re excited about the current state of the UFC, but also even more excited about future crop of fighters and what’s upcoming for them. Also, just in the spirit of combat sports, we expanded significantly our partnership with Top Rank boxing. We’re very pleased with how that’s going.

MCN: Arguably the biggest move of your tenure thus far has been your oversight of the launch of ESPN+. Has the launch and development of a digital direct-to-consumer service met or exceeded your expectations?
JP:
We’re very pleased with the uptake of the service and we’re also very pleased with the conversion from the free offering to pay. We offer a seven-day free trial and we like the numbers that we’re seeing in terms of the folks who are signing up and then are converting to pay. The product is very modern, the infrastructure is solid, the explicit personalization is working and feedback from our fans has been very positive — they’re pleased with the quality of streaming. They are also very happy with the breadth of content, including live events — we have a broad array of rights across many different leagues in many different categories. We also have a fantastic on-demand catalog of original programming. For example, ESPN+ is the only place you can get access to every 30 for 30 film we’ve ever done, so creating that destination for ESPN original programming was very important to us and it’s resonating.

We’re looking closely at the data at what’s working and what’s not; this is still the first inning for us. We’re learning from both a product perspective and a content perspective. We’re very data-focused, and will be making some changes on both sides over the coming months. We’re proud of the offering, and it goes back to our mission statement of serving the sports fan anytime anywhere.

We feel like we are definitely delivering or executing against that that mission with ESPN+, which by the way was a part of a new ESPN app. I think that’s been somewhat lost in some of the coverage on ESPN. We relaunched the entire ESPN app in April of this year and ESPN+ is a part of that.

But you know there are still other areas [of the app] which remain very important to our business and our future. For example, there’s the free news, box scores and analysis that you get within the app, as well as the authenticated area where you enter your cable or satellite username and password and you get access within the app to everything that you have on television through your MVPD subscription. So we’re proud of the app and we’re pleased with the performance of ESPN+ thus far.

MCN: Do you have subscriber numbers for ESPN+?
JP:
We’re not discussing numbers publicly.

MCN: Borrowing your baseball analogy, the overall sports digital streaming business is in the first inning. As we go down the road, do you see the future of the sports television business being played out on a digital playing field as Amazon, Facebook, Yahoo, Google and others look to aggressively secure television rights for sports products?
JP:
It’s a great question and there are a couple of things there. The first is, from an ESPN perspective, the ESPN+ service is complimentary to what we have on linear television. These services run hand in hand. What you see on television you will not see on ESPN+, and what you see on plus you will not see on television. What we have done is create optionality for the future.

We have a very stable sound platform and product, and if the time comes when we want to make some changes here, we are well set up with this with this product, which was very important to me and to the leadership team at ESPN and at Disney. What I would say more to your question and more on point here is we’ve always had competition in terms of sports rights. We obviously love the rights that we’ve acquired thus far when you look across the various sports leagues and the various sports categories. I think it’s fair to say that we have the broadest array of rights today, and those rights are serving us in our business incredibly well.

Going forward, of course, there will be new entrants to the market, and they’ve already started to dip their feet in these waters. But like I said, we’ve always had competition, and our programming team has done a fantastic job of instilling discipline into the rights-acquisition process ... they do very smart deals. So I’d say that I really like our hand here. If I’m a league and I’m contemplating partnering with ESPN versus one of the various new media platforms, I like what ESPN brings to the table.

MCN: Going back to your relationships with the leagues, as a rightsholder, do you start to get nervous when the leagues generate negative news off the field, and worry about how that might affect ratings or the network’s coverage of controversial issues from a news perspective?
JP:
No, it doesn’t make me nervous. For us, our job is to be the place of record … we are not in the business of covering politics, but when there is an intersection of sports and politics, or sports and culture, we are going to cover it and we’re going to cover it in an exemplary fashion. As a part of that, it is also our responsibility to highlight the positive things that are happening around the leagues and to celebrate sports.

For us, we are very focused on all of the above. We’re not going to shy away from covering the more sensitive issues. We’re not going to shy away from being critical when it’s appropriate. At the same time, we’re also going to make sure that we are paying attention to all the good that’s happening in sports.

MCN: Speaking of sports news, what’s the state of the SportsCenter brand, from your perspective?
JP:
We’re very pleased about what we’re seeing from SportsCenter. We have a 6 p.m. SportsCenter show that is growing month-to-month and year-over-year. We have Sage Steele and Kevin Negandhi now hosting that show. As you know, we tried something new a year ago and it didn’t work — it had nothing to do with, in my opinion, the talent [co-hosts Jemele Hill and Michael Smith]; it was a new format, and I applaud the team for trying new things. The format did not work, and we’ve made a change.

We move quickly — we’ve prided ourselves on trying new things and we’ve also prided ourselves on looking at the data and not being afraid to say “OK this didn’t work, so we’re going to move on we’re going to learn from this.” We’re better because of it and that’s what we did with the 6 p.m. SportsCenter, and we’re very pleased with how that show is performing now. At midnight, we have Scott Van Pelt who is just absolutely fantastic and is an example of us at our best. That show is performing very well. So we have some really good things going over here on the SportsCenter side and you know that is definitely creating some momentum over here at ESPN.

MCN: If we have the opportunity to sit down next year to discuss the state of ESPN, what would be the biggest highlights?
JP:
I would want to tell you that we’re even more pleased about our strategy as it pertains to direct-to-consumer and ESPN+; that we’re very pleased about the state of our audience; that our median age has gone down; and that we are more appealing today than we were a year ago to a younger generation. That we have not been afraid over the past year to try new things and have not been afraid to fail, but we’ve learned from our failures and we’ve gotten better because of them. Finally, we love the quality of the product that we’re putting on-air. That’s the most important thing for our business, and it’s something we will never ever sacrifice.

When ESPN President John Skipper abruptly resigned this past December, a frenzy of speculation erupted over who would take over cable’s leading television sports brand in the most critical juncture in the network’s nearly 40-year existence.

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