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ESPN's playbook
Sports media monster wants more of your time, attention and (most of all) money.
December 6, 2005: 5:48 AM EST
By Marc Gunther, FORTUNE senior writer

NEW YORK (FORTUNE) - You can watch ESPN on cable at home. You can visit ESPN online at work. You can listen to ESPN radio. You can read ESPN the magazine. You can play ESPN video games and, if you live near one, you can eat and drink at an ESPN restaurant.

You would think this would be enough ESPN. You would be wrong.

The people who run the Bristol, Conn.-based sports media monster want more of your time, attention and money. With an Internet-only live broadcast of a Villanova-Bucknell college basketball game on Dec. 6, a fledgling channel called ESPN 360, available only on broadband, showed its 100th live sports event.

And, just in time for the holidays, ESPN is rolling out Mobile ESPN, which consists of an ESPN-branded cell phone and an ESPN-branded mobile phone network that will deliver ESPN-branded sports news, scores, video highlights and commentary to fans who don't get enough sports in their lives. With its usual humility, ESPN calls the phone: "The greatest invention in the history of the world. Ever."

Big HDTV home theater screens, tiny phone screens, the computer screen you are looking at right now -- ESPN wants them all.

For ESPN, which is 80 percent-owned by The Walt Disney Co., pushing sports onto new platforms is old hat. When ESPN's first cable channel launched in 1979, skeptics said there was not enough sports to fill a 24-hour cable network, or enough fans to watch. (Today, ESPN has seven domestic channels.) ESPN built a robust Web site in 1995. It produced high-definition TV shows before most viewers could watch them.

"We're willing to be on the front edge of change," says George Bodenheimer, the president of ESPN. Young male sports fans tend to be early adopters, so it's natural for ESPN to be tech-savvy.

This latest push -- the Internet and cell phone initiatives -- is part of a big technology initiative at Disney. The goal, according to newly-crowned CEO Bob Iger, is to get Disney content to more consumers on more devices, any time and place they want it. Disney rocked the TV business in October when it agreed to provide TV and cable shows, including such big hits as Desperate Housewives and Lost, to the new Apple video iPod.

Much like the iPod, the Mobile ESPN product is an attempt to marry hardware, software and content. "It is designed from the ground up to serve the sports fan," says Salil Mehta, an executive vice president of ESPN. While the phone is made by Sanyo, and Sprint operates the mobile network, the keyboard uses ESPN's logo and typeface and the phone provides one-click access to sports content, which can be customized.

Will people watch touchdowns and slam dunks on a two-inch screen? Maybe. A study by a British consulting firm called Juniper Research projects that mobile TV subscription revenue worldwide could top $7.6 billion by 2010, compared with $136 million in 2005. Big media companies, including ESPN, already sell news, sports, weather and stock quotes to all the major U.S. wireless carriers.

Mobile ESPN is pricey -- $399 for the phone, another $65 a month for the service -- but costs are expected to fall. Currently, it's being sold over the Internet and at Best Buy stores in four test markets, Austin, Minneapolis, Reno and San Antonio.

ESPN won't disclose sales but Mehta said, "This is an extremely attractive business even at low penetration." A national rollout is planned for Super Bowl Sunday.

Meanwhile, ESPN has put more than 200 full-time people to work on, the most visited sports Web site. It attracted 17.6 million unique users in October, according to comScore Media Metrix. The growth of broadband in homes has been a boon to ESPN, although its usage still spikes during the workday. ("I don't think we're doing much for office productivity," quips one exec.)

Ad sales are booming and at least 100,000 people pay about $40 a year for premium content, much of it aimed at people who compete in fantasy sports leagues, according to John Kosner, general manager of ESPN New Media.

ESPN 360, which is distributed by broadband providers, shows such live events as college basketball, college football, bass fishing, even footage of pro golfers at the driving range.

Meanwhile, some interesting intramural struggles are unfolding online where the leagues have their own channels. The NFL, for example, won't allow sports sites to use clips from its games, keeping them for Major league baseball delivers radio broadcast on its own site, too. They don't need ESPN.

But ESPN needs to constantly increase its revenues and earnings. Analysts say ESPN, which all but saved Disney from disaster when ABC was in the tank and Disney theme parks suffered after September 11, generated about $5 billion of Disney's $30.7 billion in revenues for the fiscal year that ended Oct. 30.

Going forward, ESPN needs to cover the rising costs of sports programming. In its last two big deals, ESPN agreed to pay $2.4 billion over eight years for major league baseball, an increase of 50 percent from the prior deal, and a staggering $8.8 billion for eight years of Monday Night Football, which is winding down its final season on ABC. Both deals gave ESPN rights in new media as well as old.

What's next? Well, given the friendly relations between Bob Iger and Apple's Steve Jobs, ESPN shows are likely headed for the video iPod. Disney and Comcast are talking about putting ESPN on the cable operator's video-on-demand service. Soon to come is a tiny ESPN alarm clock, to be implanted in a fan's ear, so that he or she can be awakened each morning with scores and highlights of late games from the night before.

OK, we made up the part about the alarm clock. But we are not making up the fact that, according to ESPN, there are about two dozen American children whose parents chose to name them Espn or Espen or Espy after their favorite cable TV network. So much for the notion that round-the-clock sports always stands between a husband and wife.  Top of page

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