OUTSIDE THE LINES

ESPN's New Strategy Irks the Sports Leagues That Helped It Thrive

By Joe Flint
Staff Reporter of The Wall Street Journal

ESPN became one of the most profitable cable networks because of its mutually beneficial relationship with the sports establishment. But that cozy alliance may be fraying.

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Outside the Lines ESPN's New Strategy Irks the Sports Leagues That Helped It Thrive

These days, the network is showing a new aggressiveness by introducing original programming-including shows like "Playmakers"-with the edgy, push-the-envelope style that has helped cable channels compete with traditional broadcast networks. In its first season, plotlines in "Playmakers" included a cocaine-addicted running back who steals morphine from a sick child he visits in the hospital, and another football player who is arrested for assaulting his wife.

Denver Broncos owner Pat Bowlen, head of the committee that negotiates NFL TV contracts, calls the show "horrible." He says he can't understand why ESPN, which has profited from its relationship with pro football, would "go out and crap all over the product."

A Reason to Tune In

The answer may come from Mark Shapiro, ESPN's 33-year-old programming chief, who is leading the network's new strategy. "If we don't grow, we'll die," he says. Original programming "lets us dictate our future," says Mr. Shapiro.

By showing all sports, all the time, ESPN built a symbiotic relationship with professional leagues. Advertisers loved its young male audience-a tough group to reach on television-and ESPN acquired rights to show games in all major sports. ESPN was then able to charge cable and satellite operators high fees to carry the channel. ESPN now pays $600 million a year for its NFL rights. It pays another $135 million for baseball and $400 million for basketball.

ABC bought ESPN in 1984. When Walt Disney acquired ABC, it became the majority owner of ESPN. The remaining 20% of ESPN is owned by the publishing and broadcasting company Hearst. ESPN now accounts for more than 15% of Disney's bottom line.

Behind ESPN's effort to reinvent itself is a shifting landscape for the business of sports and television. The price for TV rights for major sports continues to rise. While ESPN has been successful in passing on much of those costs to cable and satellite distributors, a backlash is beginning against its high fees. And with more cable networks going after big sports, ESPN faces increased competition.

So ESPN is pushing for programs that will give people a reason to tune in besides watching a game. Original programming, ESPN contends, will help provide steadier ratings and bring in new viewers, especially women. Unlike sports events, movies and other dramatic shows can be repeated frequently. That is more important these days, since ESPN now operates five channels that are in constant need of programming.

But this ambitious remaking of the channel threatens ESPN's relationship with the titans of big-time sports, the major professional leagues and team owners. ESPN is heading into the seventh year of an eight-year, $4.8 billion deal to carry football. Although the NFL benefits from ESPN's hours of free promotion, the league has other alternatives as the next round of TV negotiations for football begins to gear up.

ESPN's dealings with the NBA have also been rocky at times. Some league officials were miffed at ESPN's production of games shown on ABC last year, according to people close to the situation. Some felt the quality of the commentary and the on-screen graphics weren't as good as when the games were shown on NBC, which once held the contract. The NBA made it clear it wanted a new play-by-play announcer to do the biggest games. So Al Michaels, an announcer for "Monday Night Football," was signed up, for a three-year contract valued at several million dollars.

NBA officials were also dismayed by the first reports that ESPN was planning a reality show starring Dennis Rodman, the hard-partying former player for the Detroit Pistons, Chicago Bulls and Los Angeles Lakers. ESPN initially denied those reports, but then aired the documentary, "Rodman on the Rebound," last month.

NBA Commissioner David Stern says he's "puzzled" by many of ESPN's recent decisions. "I think it raises issues of what they want their brand to be," he says. "ESPN is probably the most valuable asset in all of sports, but as we know in sports you sometimes get defined by your weakest moment."

Founded in 1979, ESPN offered meager programming in the early days-auto racing, college basketball and college football, many of the events on tape. But when the NFL decided to put more of its games on television, ESPN began to gain respectability. It won a Sunday-night NFL contract, shared with Turner Broadcasting. After that, no cable operator could afford to try to sign up new customers without ESPN in the package. ESPN pressed its advantage, commanding fees from cable operators that are among the highest in the business-now at more than $2 per customer per month.

The ratings for football games were huge, in cable terms. "The day ESPN got the NFL was the day it stopped being the monster-truck network," says Keith Olbermann, the former anchor on "SportsCenter," ESPN's signature highlight show.

"SportsCenter" helped solidify a brand built on irreverence, fast pace and a down-to-earth fan's view of sports. It extended the brand to new channels such as ESPN2, ESPN Classic, ESPNews, a high-definition TV channel and a future Spanish channel. Add to that a radio network, a Web presence, a magazine that competes with Sports Illustrated by appealing to young fans, and even a couple of sports-theme restaurants.

'Held Hostage'

While ESPN does very well when it broadcasts fan favorites such as football, baseball or Nascar racing, viewers bail out when the network runs second-tier sports. In 2001, when ESPN lost Nascar, for instance, its ratings suffered. That "woke us up to the fact that we are in many ways held hostage to great match-ups," says Mr. Shapiro. Original programming, Messrs. Bodenheimer and Shapiro say, will provide a hedge against big ratings fluctuations.

One of Mr. Shapiro's biggest successes is the two-year-old "Pardon the Interruption," a sports talk show hosted by sportswriters Tony Kornheiser and Michael Wilbon. Another is "Around the Horn," which features five sports columnists debating issues of the day. Two original movies that premiered last year also scored, each drawing over four million viewers.

The biggest risk in plowing ahead with original programs may be the financial cost. "Playmakers," for instance, can run about $1 million per episode, and the two movies cost several million dollars each.

"Playmakers" creator John Eisendrath acknowledges taking a lot of license with the show. "My job is fiction," he says. "This is football in the sense that we're using football as a vehicle to tell stories about men."

Mr. Shapiro is unrepentant about the content of the show: "Our fans don't think 'Playmakers' is the NFL anymore than they think 'The West Wing' is George Bush's White House."

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