What three areas have the biggest potential for growth in your sports coverage?
You can’t deny that the NFL has seen incredible ratings and continues to grow. Soccer is second. The third one is up for grabs: the NBA has come back really strong, and baseball continues to do well. The traditional sports have always done well, but in this past year we’ve seen nice growth across the table.
ESPN scored a huge coup when it landed the contract for Monday Night Football in 2005. How has that worked out?
It’s been phenomenal. We’re very happy with the performance of that contract. We took a product that was really a three-hour window on Monday Night Football, and after ESPN got it in 2005, we began to dedicate the whole day to coverage. So you’ll hear about the upcoming event starting around 6 a.m. on radio and the Internet. We have studio shows that surround the coverage of the game itself. The game just happens to be one piece of the coverage. There’s only one game on Monday night, and therefore we can cover it very significantly — not only on the day but running up to that day.
What’s been your role in ESPN’s acquisition of programming rights for such events as Monday Night Football, The Masters in golf, and U.S. Open Tennis?
I’m involved in any programming-rights deal that gets done. We strategically decided 8 to 10 years ago that we were no longer just in the television business. As a result, we’re looking at the financial models and the return on investment for acquiring digital, publishing, radio, and cable TV rights. I play a significant role in evaluating the impact of these deals on advertising sales and production costs — and ultimately what we’re prepared to spend for those investments and content.
What have been your biggest challenges as the CFO of ESPN?
The biggest challenge has been balancing continued investment in new technology and new-product development with the concern that it may require time to recoup that investment. In 2009, everybody struggled financially. Balancing the continued desire to invest in new things, such as 3D technology, given where our performance levels were then, was no easy task.
Also challenging — especially when you have a very successful company — is ensuring that the financial acumen and controls are in place to make sure that we continue to be the lowest-cost provider and not get carried away with our success. Knowing when to say no — or when to say we’ve tried this and we need to move away from it — is a big part of my job.
Can you give an example of that?
The best example is when we decided to get into the phone-manufacturing business about five or six years ago. Not only were we creating content for the phone business, but we also thought we could manufacture a cell phone and get into the mobile business itself. We got to a point where we recognized that manufacturing phones was not our core expertise, so we decided to change our business model and exit phone manufacturing, but continue in content development for mobile applications. It was a good experience because we were forced to evaluate pretty quickly that we could do a better job in creating content than in manufacturing. Now we have lots of apps on mobile phones and the iPad, and that’s all an offshoot of the investment we made in developing content for that medium.
Another example occurred about two years ago when we decided to give away our Insider product — which includes exclusive, online sports journalism and blogs — for free. We eliminated our subscription fee, but not long after that we realized that we really had something unique and exclusive, so we decided to put the genie back in the bottle and once again charge our fans for content that they could get only on ESPN.com. We’ve been very successful in pulling that back and monetizing it because of the exclusive nature of what we get and give our fans.
Many media companies have struggled with the pay-versus-free business model regarding Web content. What was the determining factor in reverting to a paid model?
We found out that it wasn’t about the number of site visitors but about the quality and exclusivity of the content, which is tailored to a specific and very passionate fan base. We have predictive tools and analysis, professional-level scouting information, the best draft coverage, exclusive video, and much more. That led us to reevaluate the business model and we decided to go back to a paid model. People and companies learn from mistakes, so we don’t look back, we just move forward.