Multichannel News Interviews John Skipper

Meet ESPN’s New Skipper

Former Content Chief Discusses Taking the Helm at Worldwide Leader

By Mike Reynolds -- Multichannel News, 5/21/2012 12:01:00 AM

With the dawn of 2012, The Walt Disney Co. placed day-to-day leadership of its most profitable unit, ESPN Inc., in the hands of John Skipper, who had served as the sports giant’s content chief since 2005. Skipper, 55, who joined ESPN as senior vice president and general manager of ESPN The Magazine in 1997 and, before that, headed The Disney Publishing Group, succeeded George Bodenheimer as president of ESPN and ABC Sports and co-chair of Disney Media Networks. 

In a wide-ranging interview with Multichannel News online news editor Mike Reynolds — one of his first since assuming the top spot — the affable Skipper discussed the worldwide leader’s position in the multichannel universe; its license fee, a source of envy and enmity; the role of WatchESPN, its TV Everywhere gambit; where the company stands on an array of rights; the increasingly competitive sports landscape; and his goal to grow market share.

MCN: Has the transition been what you expected? You worked closely with George for many years, but being in the seat, how different is it? 
John Skipper: Well being in the seat is very different, but to answer the first part of your question about how has the transition been relative to the expectations, it’s actually been spectacular. I mean I couldn’t be more gratified by the support I’ve gotten from all the people at ESPN. 

If you look at ESPN from the outside, I think you would probably agree with the proposition that we have very stable and strong senior management. You’d probably agree that our business is very stable. It’s a very logical business plan that’s been developed over a lot of years. Our core values have been very consistent. So I don’t have to change anything dramatic, I don’t have to fix anything dramatic … 

I don’t want to say it’s been easier, because I don’t want to undercut the sort of level of responsibility or the profundity of the responsibility, but it certainly has been, I think, pretty seamless. I mean there have not been any big bumps or any huge surprises or unpleasantness. Our business has remained sound, and we’re going to have a very good year. 

MCN: What role do you think ESPN has played in the growth of sports in American culture, that many folks want to be in the conversation on a day-to-day basis? 
JS: I know we say it over and over, but it actually is genuine: We have been well-served by the focus on serving sports fans. And it is a prism through which we always think about how we make decisions. If you think about the arc of the company from the presentation of 24/7 sports, the idea that, gee, sports fans care about sports all the time, and the idea then that we create multiple channels, multiple platforms across all devices so that you could, with a lot of networks, a lot of platforms, you can get what you want when you want it. 

And I do think all of that work has created a relationship between ESPN and the sports fan where we are — and you’ve seen all the research — we are clearly the preferred brand. If you ask any sports fan, where would you like to watch this? “ESPN.” Who do you trust the most? “ESPN.” Who has the best line of programming? “ESPN.” 

Having said that, and given the prominence of ESPN in the sports landscape, we understand that, appropriately, we are scrutinized to a level we’ve never been scrutinized before and that we have a responsibility to try to continue to uphold standards, to treat people fairly. 

MCN: Many are passionate about sports, but others say: ‘Hey, I don’t care about sports and why am I paying for ESPN on my cable bill?’ ESPN has the largest monthly subscriber license fee in basic cable, about $5 a month. What do you say to those folks in terms of the value that you guys bring to the multichannel equation? 
JS: I don’t think anybody disputes that we bring the most value of any single channel, and we are the clear, No. 1 choice among men as their favorite channel. I think consistently in surveys of distributors we provide the most value, and they acknowledge that. Ultimately, they acknowledge it in the deals we do. 

There is a lot of discussion about the rate, of course, but it is a negotiated rate. It’s not a mandate; it’s not a subsidy, as one of my competitors once called it; it’s not an annuity. It’s an amount of money which we think we earn every month. I am sure you can find somebody somewhere who doesn’t watch it, but this notion that it’s a large number is just not true. Some 120 million watch ESPN in some way, shape or form every week. 

MCN: Every week? 

JS: So, we’re not a niche channel. And sports is disproportionately important to the whole proposition of pay television. Everybody would acknowledge we’ve been very important in creating the whole environment. We have the most valuable programming. We pay the most for our programming. We’re not doing reality series that you can do for X number of thousands of dollars an episode. Everybody sees what our NFL deal costs, what our NBA deal costs, the quality of our production, what we do in South Africa around the World Cup or what we’ll do in Europe around the European championships. We provide the most value. 

And I think, again, if you look at the fact that we recently did very quiet, non-disputatious deals with Comcast and Time Warner Cable … We did long-term deals, so that has to be an acknowledgement that you’re providing this level of value, and we acknowledge that and we don’t take that lightly. 

MCN: That value has extended on the technology side … 

JS: We are still trying to be the most valuable partner in, for instance, continuing the current business model, right? I mean the whole WatchESPN application is all about making sure that you have to have a pay television subscription before you get any of our content on whatever device. We have never given away our content. We have always been in lockstep with our distributors that you pay us, we’ll provide you a lot of value and there is no end-around. 

NBCUniversal, I think, has put a big marker in the ground with the Olympics, which I applaud. Which is, you’re not getting this unless you have a pay television subscription. You have to be authenticated. We think that sports are the best antidote to cord-cutting, and our intention is to help our partners there. 

MCN: Is authentication the ethos of what the pay television community is becoming and will be going forward? 

JS: Yes. I think we think it’s the model going forward. Now, we’ve got some work to do. [WatchESPN] is available to 40 million households right now. We need to work with Time Warner Cable, with [Verizon Communications] and with Comcast and in future deals with our other partners to make sure we can help people authenticate, download the application and, at that point, they can watch our networks across all platforms. 

MCN: You seem to be tying WatchESPN to bigger contract negotiations? Or are you out there in the marketplace looking at WatchESPN deals even if your current contracts aren’t quite due? 
JS: We are in the market talking to all of our partners about WatchESPN. We have, to date, wanted to do deals that included WatchESPN in a larger deal. We have not sold it as a one-off , and that will continue to be what we want to do. 

MCN: Cox, Charter, the NCTC — are they next in the negotiation cycle? Where do we stand with some of the distribution deals? 

JS: I’m prohibited from telling you exactly when these deals are. If we have done deals with certain people, you can certainly make the appropriate elimination that we have discussions with the other guys. 

And not very many years in the future, our expectation is that we’ll have deals that include WatchESPN with all of our partners. Every one of our partners would like WatchESPN. I mean, we have had discussions; nobody has said, “We don’t like the idea, we don’t want it.” Everybody has said we’d like it. And we are currently engaged with just about everybody who we don’t have a deal with to have a discussion. 

MCN: Is ESPN 3D slightly ahead of its time? 

JS: Yeah, but that’s OK. We want to be leaders, we want to be first; we benefited — whether it be HD or other technologies, KZone, the first-down marker. We benefited from being the first and, in this case, it’s okay that consumer adoption is a little slower than we expected. 

MCN: How about the advertising market for sports? Your upfront expectations? 

JS: The marketplace is strong. The market for NBA is very strong. The market for Major League Baseball is very strong. We have good numbers to date coming up for the ESPYs, Wimbledon. 

Like everybody else, there is going to be some variability based on the economy. Sports has held up well, and I think we’ve held up well. It doesn’t mean that we don’t understand that the market overall is a little fragile. If you’re going to cut your budget, you’re not going to cut your core properties, and we’ve held up pretty well because of that. 

MCN: Baseball: The national contracts are up after the 2013 season. Your sense for the erstwhile national pastime? 

JS: Baseball is a very important property to us. Sunday Night Baseball is a beautiful product. The highlights are great. Given the quantity of games and the time of year they play, particularly once you get past the NBA Finals, baseball has a pretty good run of six or eight weeks where it is clearly front and center. Given what we talked about a little bit before about our position with fans, it’s very important to us. 

Baseball is a very, very strong local sport. 

MCN: Absolutely. 

JS: Th e RSNs are important to baseball. We know that the Yankee fan is going to watch, what, 150 to 155 games a year on YES [and WWOR]. A lot of the passion is about your hometown team. And we think we play an important role with Sunday Night Baseball, Monday night, Wednesday, SportsCenter, Baseball Tonight in getting baseball to a national audience. And, by the way, around fantasy. 

So, we’ve got a good relationship. I think it’s public knowledge that we are in a period of time in which they’re discussing renewals. It’s our intention to remain valued partners with baseball. 

MCN: I’ll go a similar route with pro basketball. ABC had its best year; ESPN matched its top delivery. There are a lot of games, The Finals. NBA commissioner David Stern says negotiations for the next contract start as soon as the last deal is signed. Has that process begun in earnest? 
JS: David is correct. You’re always sort of negotiating, sort of selling. But we’re not in any official window; there’s not any formal action. 

MCN: Let’s talk about soccer. There were 1 million viewers on ESPN on April 30 for Manchester City-Manchester United. You guys got a lot of guys to play hooky [that] day, John. 
JS: Yeah. And I didn’t even see it. Th at was on television. I don’t know what we had on ESPN3. I suspect we had another three or four hundred thousand people on [ESPN3]. I think it’s the biggest cable audience for the Premier League. Th at’s pretty fun; that’s pretty fun. 

MCN: The Premier League rights bidding will take place this summer. Is Al Jazeera in there? I guess they have the La Liga rights? You currently sublicense those from GolTV. Where do you stand, and is there anything you can say about Al Jazeera? 
JS: I don’t think the U.S. offering will be until the fall. We, of course, love the Premier League. We have good discussions with [chief executive] Richard Scudamore, and it’s our hope to renew the Premier League and continue doing it. There is not much more fun than waking up on Saturday morning and putting on a game at 7:45 a.m. in HD. 

MCN: It’s a good thing. 

JS: Our fans have really responded to that and to the afternoon games. So we would like to remain in that. Al Jazeera? I have not spoken to Al Jazeera about the Premier League. 

MCN: Or La Liga? 

JS: Or La Liga. I have not spoken to them. Look, they are clearly a force to be reckoned with. In France, you saw the power of what they can do. I can’t tell you that we have any particular insight into their goals here … 

We get a lot of questions about competition, and a lot of those questions sound like, “Oh my gosh, you haven’t had competition.” We have never done a deal where there weren’t at least two bidders and sometimes four, five or six. And we now are in a new world where it’s possible that Al Jazeera will be one of those bidders. We will continue to do business the way we’ve always done it. We want to have as broad a collection of rights as possible but we’ll be disciplined about what we can pay. 

I do not have any intention of hiding my disappointment about not having the World Cup in 2018-22. We love that event, and it has been so much fun to see it grow from Germany to South Africa to what I know we’re going do in Brazil. It’s disappointing that run for us in the United States — because we’ll have rights in other places — is going to come to an end. But it’s business. 

I also am not going to fall into the trap, which I don’t think is appropriate, of suggesting that somebody else paid too much for it. Fox has a soccer channel. Ultimately, at some point you have to decide what something matters to you. And they made what I assume is a rational bid for them. 

Remember, it was a blind auction. You put a number on a piece of paper, put it in an envelope, so you’re guessing. And we guessed wrong. It happens with other people as well. (Laughter.) 

MCN: You guys just announced the worldwide rebranding of your soccer brand. Since you traded out ESPN Classic for ESPNU, the numbers have grown to 75 million for U and dropped to about 33 million for Classic. Is that a possible home for a soccer channel or another linear iteration?

JS: We don’t have plans for that right now, for a linear soccer channel. You’ve heard me talk about the Premier League. We like the World Cup on ESPN and ESPN2, 3. We like the European Championships on ESPN2 and 3. And we like those homes. But we don’t really have enough soccer content to support a 24/7 channel. We’ll continue to care about La Liga, Mexican futbol, other Latin American futbol. It’s very important for ESPN Deportes. So we want to accumulate soccer product. We want to do studio programming but we don’t have any plans for a 24/7 network. 

You asked about Classic. We’ve been doing blocks around the weekend for it to be a fi lm channel, where we’re really concentrating on the documentaries and doing stunts around contemporary events. So baseball movies around the opening of the season. We might have a next act at some point, but not right now. 

MCN: Obviously, you guys are the king of college sports, my words, I don’t know if you guys would say that?

JS: Definitely not. (Laughter) 

MCN: Where does U stand now, and how big is it going to get? 

JS: I think the upside for U is very high. We’re at about 75 million homes, we’ve just been in Nielsen ratings for about a year, and it’s growing very quickly. We could accumulate a big audience on U when we have the right game. Get a big SEC football game on U, we get an audience. 

And a lot of it’s about shelf space. College programming is very important for us. What’s important to our partners, and we have significant deals with the SEC, the ACC, the Big Ten, the Big 12, the Pac-12 and the Big East, not to mention about 25 other conferences. So what we’ve tried to do with U is to create more shelf space, another appropriate home. So you’ve got ESPN on ABC, ESPN, ESPN 2, now U and now 3. Because with all of this content, and particularly with college football, which is packed into most of the product being on a Saturday, we need more shelf space in order to provide a national broadcast for all of our partners. 

MCN: Your new $15.2 billion pro football contract is the largest in U.S. sports history. You pay so much more than anybody else does for the NFL. Those 500 extra hours, all those highlights, are they worth it in the grander economic scheme of things? 
JS: I’m going to directly answer that, but first, the setup is that we look very different in terms of what we use than everybody else. The overwhelming preponderance of value for the other NFL partners is in the three-hour windows. Overwhelmingly so. 

For us, Monday Night Football clearly has enormous value. It’s the highest-rated program in cable television; that’s enormous value. But it is not the overwhelming value. We think about multiple networks, mobile alerts, highlights on ESPN.com, 500 additional hours of studio programming, unlimited NFL highlights across our news and information platforms. I mean if you watch our networks, and I know you do, what we get from that NFL deal is just dramatically different. So the answer to your question is, yes. I actually think we probably derive, on a costspent [basis], more value than anybody else. So while we pay more, it’s not just a factor of, gee, they get X number of three-hour windows and we get that plus a little bit more; we get a lot more. It’s just not the same. 

MCN: Speaking of that three-hour window, I think you guys have a better schedule this year. But generally speaking, NBC gets a better primetime schedule than ESPN. Did you guys complain? 
JS: There’s no whining in scheduling (Laughter). We do not whine, we do not complain. It’s our job because our contract does not provide us with specific requirements for the schedule. The NFL provides us with a schedule of games that is completely in compliance with what we’ve purchased; we of course lobby, cajole, point out the value of the Monday Night Football brand and how important it is — it’s their brand, by the way, which we’re licensing. 

So yeah, we work really hard and the NFL this year, I’m happy to say, they responded. We got two Denver games, where we can feature Peyton Manning. We got three Chicago Bears games. We got two New York Jets games. They have a very hard job, right? 

MCN: They do. Thursday Night Football, do you guys want to play there? 

JF: We love the NFL. Any other package of that product that comes up, we will be interested.