The recession-induced plunge in consumer spending seems largely to have bypassed sports, at least regarding the young, male, technology-oriented audience that tunes in to sports broadcasts. After some decline in 2009, ESPN, the sports media empire, bounced back strongly last year, no doubt much to the delight of The Walt Disney Co., which owns 80% of the company, and Hearst Corp., which owns the other 20%.
As advertising revenue grew across all its media platforms, ESPN bucked Corporate America’s current cash-hoarding ways and instead invested in projects such as last June’s launch of ESPN 3D. The network expects to offer about 100 live events in 3D in its first year. In September, ESPN also entered into a long-term, wide-ranging agreement with Time Warner to supply many new cable customers with access to ESPN stations, online content, and video on demand. The month before, as part of its push for growth via overseas markets, ESPN acquired broad rights to UK Premier League Soccer for the next three seasons.
The company and its CFO, Christine Driessen, have come a long way together. Driessen celebrated her 25th anniversary with ESPN last year, having joined the company as controller just six years after its first SportsCenter television broadcast on September 7, 1979. Since then, she has seen the company expand into radio, print, the Internet, and broadband, picking up restaurant and consumer-product business along the way. Driessen has played a key role in much of the expansion, yet she says that one of her most important roles is to pull the plug on projects that have gone awry.
The plunge in advertising revenue has killed off many media properties. Do you think this is merely a temporary symptom of the downturn or an enduring structural change?
I think it’s an economic phenomenon rather than a permanent change. Television sports, in particular, is a place where advertisers seek to reach the male audience. Because it’s must-have, we probably were hurt the least of anybody in our business. Our print business did see some decline in advertising in fiscal 2009, but in fiscal ’10 we came back. We’ve seen new spending in men’s grooming, which has become a huge category in the advertising marketplace. Insurance, foreign autos, and telecommunications have all come back nicely.
What do you see as the most promising emerging geographical markets for sports news and broadcasting?
We have a 50/50 joint venture with News Corp. called ESPN Star Sports, which distributes sports programming in multiple markets throughout most of Asia. India is a terrific market, with great fan avidity for cricket and soccer. We’ve been in business there for some years, but we think it’s ripe for further investing in sports.
Our acquisition of the rights to English Premier Soccer and our coverage of rugby and the FA Cup are also going to enable us to seek a new fan base in the UK and present ourselves in the United States as having created a great brand and a great product for the sports fans in the UK. We have a huge operation in Latin America as well. Cable is starting to see some real growth there.