SVG Summit 2017: As Fox Deal Looms, ESPN President John Skipper Hits on Sports Media’s Hot-Button Issues

In Keynote Conversation, Skipper also touched on ESPN Plus, ballooning sports rights, Total Audience ratings

As reports of Disney’s rumored $60 billion acquisition of 21st Century Fox assets engulf the M&E industry this week, ESPN President/Disney Media Networks Co-Chairman John Skipper took the stage to close out the 12th-annual SVG Summit. Though declining to comment on any reports related to the deal, he used the Summit’s Closing Keynote Conversation as an opportunity to address a wide range of topics, including the upcoming launch of its ESPN Plus direct-to-consumer OTT service, the ballooning costs of sports rights, the network’s shift to Nielsen’s Total Audience measurement, its soon-to-launch new studio at NYC’s South Street Seaport, and the current state of sports journalism.

UPDATE: Disney has officially announced a definitive agreement to acquire a majority of 21st Century Fox assets in a move that will reshape the sports-TV landscape around the globe.

Here are some highlights from the conversation with SVG Executive Director, Editorial, Ken Kerschbaumer:

On Disney’s upcoming launch of the ESPN+ direct-to-consumer OTT service:
It’s pretty clear that the technology of distributing video is going over the top, and that’s where we’re going with this. We bought in BAMTech, the world’s greatest video-platform service for streaming live events, and we’re going to launch a direct-to-consumer over-the-top service sometime this spring. We’re going launch a new version of the [free, authenticated] ESPN app this spring, which is going to be the best way to consume the totality of ESPN in the future.

In addition, we are launching a complimentary product called ESPN Plus, and it is the way to take all the stuff you love about ESPN and add more to it. Within the first year, we will have an aggregation of 10,000 new live events on ESPN Plus. That means we will distribute more than 25,000 events next year. It will also have a large collection of video on demand. You think of it in two buckets: a bunch more games, [including] e niche sports, and a Netflix-like aggregation of multi-part docuseries and behind-the-scenes [content].

What we’re really doing is preparing to thrive in the future however the business models, the way people consume content evolves. So, however the world evolves, we can adapt; we can move our content around if necessary. Make no mistake, we want to take the most value out of the current system as possible but be prepared with optionality if we need to move into a different world.

We will certainly be charging a monthly fee, with a yearly price that’s a partial discount. We have not decided on the price. What’s most important to us is to get the product and the technology right, to get the app improved and downloaded by more people, and to begin to aggregate subscribers with their credit-card information.

On the impact of digital MVPDs and cord-cutting:
What we have begun to see — and we believe that we will continue to see this trend — is that the digital over-the-top MVPDs are beginning to have a significant offset for the traditional sub losses.

We can’t see the future, but we think we can see what the options are going to be in the future, and we want to build a leading platform. I do believe that you’re going to need to have over-the-top services. We do continue to drive dramatic value from the traditional pay-television system, and we have supplemented that with being the first mover, which we did with Dish when we launched Sling, in launching an over-the-top service. In these universes, we have 100% penetration. Which means that, if DirecTV Now has a million subscribers, we have a million subscribers.

On ESPN adopting the Nielsen’s Total Audience metric:
We think the single most important thing to measure is what our total audience is for our linear presentations. And we’ve been working with Nielsen for years to get what they now call Total Live Audience, which came out eight weeks ago. It takes the traditional Nielsen homes, puts the digital MVPDs with it, puts out-of-home with it, and puts ESPN streaming with it. I’m proud that we’re the first customer. We’ve worked with them to develop it because we judged that we would be the greatest beneficiary of this. We don’t have less people watching ESPN than last year; we have more. It just turns out they’re watching in different ways. You add all those together, and our audience is bigger than ever. And importantly, 46% of the people watching on those new ways are millennials.

So the dialogue that millennials aren’t watching video, aren’t watching television, is not accurate; they’re simply watching it in a different way than we did. And this is a very important new measurement that we believe is going to help us. We’re going to sell against this. Because Nielsen measures it, it has credibility and relevance to the agencies and advertisers, and we expect to see some dramatic benefit.

It raised our total-day audience 14% and primetime audience 3%. We’ll go into the market and sell off this new currency, because it is going to be accepted by marketers. And we do believe ESPN is the best remaining live aggregation of audiences on sports. Last year, among the top-100 rating shows on television, 93 of them were sports. Last year, sports won the night 216 days out of 365, and ESPN won it 80 days of those 216. We think that trend will continue and it will be among the very last places you can get a large aggregated live audience to run your movie ads on Thursday night for a Friday opening.

On ESPN’s massive NBA-rights deal:
It is a ridiculous notion that we misunderstood the market for the NBA, that we miscalculated what would be appropriate pay for the NBA, or that the world was changing in such a way that we wouldn’t need the NBA. We’re in the third year of a 10-year deal for the NBA, and it is a spectacular deal with an ascendant league. Let me clue you in on a little secret: we can afford it. We did not misunderstand what we were going to pay. That is not a mistake; that is an excellent deal that will serve us very well over the term.

On ESPN’s plans for future sports-rights deals as digital players like Amazon, Facebook, Google, and others enter the fray:
Here’s what I see. It’s like The Who said: “Meet the new boss, same as the old boss.” We have had competition for every rights deal we ever did. We have been able to compete and aggregate a preeminent sports portfolio. I expect to be able to continue to compete and to protect that portfolio, and we welcome all comers.

On ESPN’s plans to launch a new studio and the new Get Up With Mike Greenberg, Michelle Beadle and Jalen Rose morning show at NYC’s South Street Seaport this spring:
We think, if games aggregate our biggest audiences and drive our business, then daily studio provides relevance, because you have the ability to talk to people every day about what’s going on: [for example, with] SportsCenter, OTL, PTI, Around the Horn. But we do believe that, in the medium term, we’re going to do less studio but make bigger bets. We thought coming to New York City — we do believe the morning is a time where people aren’t necessarily waking up and cutting on video on demand [but are] watching morning television — was a good place to launch a new high-impact show in the media capital of the world with a state-of-the-art 19,000-sq.-ft. studio in a brand-new development at South Street Seaport, which is developed by our partner Howard Hughes Corp. The entire multiblock area is wired to be able to do production from any street corner, and there’s the largest entertainment rooftop in the city where we think we can do stunts.

Clearly, one of the advantages of being in New York is guests. I was told that we had to worry about the fact that we’re downtown so we got to have a water taxi. And we’re going to bring guests from appearing on Good Morning America down the river to South Street Seaport.

On the state of sports journalism today:
“I think the state of sports journalism is very strong, and I think that ESPN leads the way in that. I think there’s a lot of other great sports-journalism outlets, a lot of great sports journalists, and it is their job to find the story, to use the enterprise to uncover facts to hold the proverbial truth to power. And I think that we take that mission seriously.”

On ESPN’s commitment to the written word and other sports-media organizations’ ‘pivot to video’:
We are devoted to storytelling, and there is no better way to uncover and tell a story than to write about it. We are committed to then taking that story and distributing it in all its forms, including as an interesting short video feature, maybe a long-form documentary. But most of what we do starts with writing, and it starts with trying to work out on a piece of paper or a computer. I think the idea that the written word isn’t relevant or that you don’t need writers or reporters or that the long-form feature is not relevant is ridiculous. We employ more enterprise journalists than we ever have. We continue to do that.

On how ESPN is looking to appeal to millennials:
I think we understand that we have to make adaptations. The chairman of the organization recently said that there’s a certain amount of turmoil out there. I don’t think of it as turmoil, I think of it as transition, and we have to adapt and figure out how to remain relevant. We launched SportsCenter on Snapchat; it features five millennial hosts, almost all of whom are new to our company, including Katie Nolan. We have millions of subscribers in the first four weeks. We get a significant audience, and what’s nice is, 75% of that audience is between the ages of 13 and 24. That’s why we’re doing it. We have to remain relevant to that audience; we have to go to where they are, present our signature programming in a way appropriate to that platform.

For more coverage of the SVG Summit, including stories, panel highlights, and video interviews from the show floor, CLICK HERE.

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