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What Is In ESPN’s Future?

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If you imagine the world of traditional television as a fortress on a mountaintop, one whose walls are crumbling due to heavy fire from players like Netflix NFLX 4.47% and HBO and Amazon Prime, then the seemingly impregnable tower at the center of the fortress would have to be ESPN. Why? Because the Disney-owned channel has the one thing that has managed to maintain its value while everything else gets completely obliterated: Namely, exclusive rights to a world of sports content. But is that enough—and if so, for how long?

You can tell that this kind of concern is weighing on the minds of Disney DIS -9.72% investors, because the stock dropped by close to 10% following the release of the company’s quarterly financial report, despite the fact that the overall numbers for the entertainment conglomerate were pretty good. Almost every questionon the earnings conference call was about ESPN and the ongoing loss of both subscribers and profits.

In a nutshell, the big fear is that the network’s lucrative stranglehold on sports is disintegrating, pulled apart by a combination of cord cutting, streaming via digital services and competitive pressures from all sides. There have already been rumors of cost-cutting and the channel has shed a number of high-profile (and expensive) personalities such as Grantland founder Bill Simmons, now at HBO.

Disney CEO Bob Iger spent much of his time on the earnings call talking about ESPN, and about how he doesn’t see much impact from cord cutting for at least the next five years or so—an estimate that at least some analysts think is absurdly optimistic. Iger also reiterated comments he has made in the past to the effect that if ESPN wanted to, it could come up with its own over-the-top service similar to HBO Now, and that a substantial number of subscribers would likely pay for it.

The Disney CEO also noted that 83% of all multichannel households turned to ESPN in the first quarter of this year, and that 96% of all sports programming is watched live, which he called “particularly valuable in today’s rapidly changing advertising marketplace.” And here are some media-industry analysts who agree with Iger that the existing “moat” around ESPN’s content is still pretty wide.

Ben Thompson, an analyst who writes the subscription newsletter Stratechery, said in a recent update that “ESPN is far better positioned for a world where they must go over the top to consumers than people give them credit for.” Even if ESPN was to charge more than $30 a month per subscriber—as a recent analysis said they would, in order to maintain their existing revenue — Thompson called that “a very realistic target.”

Not everyone is quite as sanguine, however. Analyst Eric Jackson said the channel might be able to engineer a transition to an over-the-top digital version of its existing service, but there are still some large question marks associated with that transition. As he put it:

“What if OTT and any new digital format is one-tenth as profitable as the Euro-socialist cable bundle? If you trade analog dollars for digital dimes, how do you wave your hands and chance basic economics?”

One of the things that makes ESPN very different from other streaming success stories such as HBO and Netflix is that the sports broadcaster’s content has an extremely short half-life. Netflix may not mind paying hundreds of millions of dollars for a TV show because it knows it can rebroadcast and license that content forever, but ESPN’s library consists of things that only have value for a few hours.

On the one hand, this short life-span is the channel’s biggest strength: When a major sporting event is taking place, people want to see it right away, and they are willing to pay handsomely for that ability. But if competitive pressure continues to increase, that life-span could become a serious weakness.

 

One potential source of competition for ESPN, ironically, is the very sports leagues and franchises that it relies on for its livelihood. Major League Baseball’s internal streaming and mobile technology operation, known as BAM, has quietly become a powerhouse in that part of the market, and now it has signed a deal to do all of the broadcasting for the NHL as well. Thompson argues that most leagues will opt for the broader reach of ESPN rather than go direct, but it’s unclear how many will feel that way, or for how long.

ESPN has signed expensive long-term contracts with most of the leagues it deals with, but if more and more of them start to pursue their own over-the-top deals via providers like BAM or even Yahoo and other outlets, then ESPN’s iron grip on live sports could continue to weaken.

If you’re an investor in Disney because of its ESPN stake, these are some of the questions you probably want to ask yourself: How much value do those existing contracts have as the TV market continues to implode? What could potential competitors, including the leagues themselves, do to ESPN’s margins? And if it decides to (or is compelled to) offer its own over-the-top service, how many people would likely subscribe to it directly, and how much would they be willing to pay?

Credit to Fortune who originally published this article

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Warriors Fans Throw Objects At Charles Barkley On Inside the NBA Set

“Barkley yelled back at the crowd but never actually left the set.”

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TNT/Larry Brown Sports

Charles Barkley is no stranger to being the object of fans’ ire. The cities of San Antonio and Cleveland have a history of being the butt of the Round Mound of Rebound’s jokes. Thursday night in San Francisco, fans of the Warriors took things to a different level, throwing objects at Barkley on the Inside the NBA set.

The TNT studio show was broadcasting live from outside the Chase Center. The crowd chanted “Chuck, you suck!” at Barkley before the game. After Golden State clinched a birth in the NBA Finals, things got physical.

Fans threw things at the set, including a rolled-up t-shirt, which hit Charles Barkley in the back of the head. That resulted in Barkley leaving his seat and bowing up to the audience.

“Come on Chuck!” Ernie Johnson pleaded as Kenny Smith repeatedly said “Sit down Chuck.”

Barkley yelled back at the crowd but never actually left the set.

Now that the Western Conference Finals are over, TNT’s NBA schedule has concluded. That doesn’t mean Charles Barkley won’t return to San Francisco for the NBA Finals, but it is highly unlikely given the reception he has received there.

Barkley spent most of the postseason telling Golden State fans they were annoying and need to shut up and saying the city of San Francisco has “dirty ass streets”.

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Jon Miller To Call MLB Sunday Leadoff Game On Peacock

“According to a press release, Jason Benetti has a scheduling conflict.”

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Rich Eisen Show

Legendary play-by-play man Jon Miller will be returning to the national broadcast booth on Sunday. He will call the San Francisco Giants vs. Cincinnati Reds game for Peacock. He’ll be joined in the booth by Barry Larkin and Shawn Estes.

According to a press release, Jason Benetti has a scheduling conflict. Benetti, the regular play-by-play voice of Peacock’s MLB Sunday Leadoff, is also the television voice of the Chicago White Sox. NBC Sports Chicago has prioritized this weekend’s series between the White Sox and Cubs, making Benetti unavailable to the national broadcast.

Miller has been calling Giants games since 1997 and previously shared the Sunday Night Baseball booth on ESPN with hall of famer Joe Morgan.

The broadcast, called MLB Sunday Leadoff, will begin at 11 a.m. with pregame coverage hosted by Ahmed Fareed. The game broadcast begins at 11:30 a.m.

The game will take place in an exclusive two-hour broadcast window prior to the start of the rest of the league’s day of games.

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Amazon Eyeing Pat McAfee For Thursday Night Football Megacast

“No deal is done yet. A source tells McCarthy that it hinges on McAfee’s very busy schedule, but a Megacast is appealing to the former punter.’

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First it was the Mannings. Now it’s McAfee. Michael McCarthy of Front Office Sports reports that Pat McAfee could be at the center of an alternate broadcast of Thursday Night Football on Amazon in the 2022 season.

No deal is done yet. A source tells McCarthy that it hinges on McAfee’s very busy schedule, but a Megacast is appealing to the former punter.

Rumors of Amazon’s interest in McAfee began to bubble up last month. While he never directly addressed them, he did make mention on his show that he was “up to something” and insinuated that Amazon wasn’t the only company he was talking to.

McAfee has said on his show in the past that he wants to be part of an NFL broadcast. However, he is firm in that it would not be in the broadcast booth.

“I can’t call games. Not yet,” McAfee said on a show in February. “Have to be done with this show to call games. Because that’s like a 3-day, 4-day thing.” 

In addition to his daily show, McAfee is also committed to the WWE. He is on the road for Smackdown every Friday.

There is no word on exactly what a Pat McAfee-centered broadcast would look like. When reports first came out regarding discussions with McAfee, Ryan Glasspiegel of The New York Post reported that moving The Pat McAfee Show to Amazon was on the table. If that happens, it would make sense to use his entire crew on the Thursday Night Football presentation.

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