Hollywood Reporter: How ESPN Is Dramatically Rewriting Its Streaming Playbook

Story from Hollywood Reporter:

Walking around ESPN’s sprawling campus in Bristol, Connecticut, visitors will find the sports giant’s mission statement at almost every turn. On walls, in windows, in the cafeteria: “Serving sports fans. Anytime. Anywhere.”

It’s a humble slogan for the biggest brand in sports media, and arguably one of the biggest brands in all of sports, but ESPN chairman Jimmy Pitaro argues it is “more relevant today than it’s ever been.”

Sports – like the entertainment industry writ large – is undergoing a dramatic, generational transformation, with viewership fragmenting, cable TV declining, and streaming on the rise.

“If you drill down a bit, what we’re really saying [with the mission statement] is that we need to be everywhere,” Pitaro says, citing streaming, of course, but also TikTok, YouTube, and other platforms.

And so ESPN is pivoting, with Disney CEO Bob Iger telling Wall Street that “building ESPN into the preeminent digital sports platform” is one of his four top strategic priorities for the company. With ESPN generating more than $4 billion in revenue and more than $1 billion in operating income just last quarter (about as much income as Disney’s entertainment division, which had nearly 2X ESPN’s revenue), the need to secure its future becomes even more urgent.

Over the last year, ESPN has undergone a quietly radical transformation: It is reorienting itself around streaming in preparation for what Pitaro calls the “flagship” service launch next year; It is reworking its sports rights deals, locking in key partners and cutting others loose; And it is shifting the mix of its on-air talent, with dozens of names being let go over the past year, even as others are brought in.

With regard to the streaming launch, Pitaro says that “it’s an understatement to say that we have all hands-on deck right now from a product and development perspective.”

While the details on the service remain in flux, including its exact launch date, pricing, and many features, Pitaro nonetheless teased what consumers can expect, speaking to reporters in ESPN’s cafe Aug. 28.

There will be seamless integrations with ESPN’s fantasy sports product, and a single sign-on with ESPN Bet, the sports betting operation run by Penn Entertainment, with Pitaro promising “deep connective tissue” between its programming and those efforts.

There could be integrations with regional sports networks, perhaps letting ESPN users access games or regional sports network apps through flagship. “We want to be at least part of the solution here,” he says. And of course a multi-view experience that has become table stakes on services like YouTube TV, letting users watch multiple feeds at once.

And there will be artificial intelligence, with Pitaro referencing NBC’s AI-generated Olympics recaps, voiced by a digital recreation of sportscaster Al Michaels. “I can’t commit to this, but we are thinking around that time we could have a personalized SportsCenter [powered by AI],” Pitaro says.

But a media product is only as good as the content that lives on it, and ESPN has made major moves, perhaps most notably securing an 11-year deal with the NBA to remain its primary rights partner, while also letting rights go, including the Big Ten.

A senior executive at the company said that ESPN is focused on securing “must haves,” and while they didn’t name them, it would certainly include the NFL and NBA, as well as “emerging” sports that are small but growing.

As with the rest of the entertainment business, it is the middle class of sports – too big to be emerging but not popular enough to be a must-have – that are getting squeezed. Major League Baseball could become a victim of that reality, with ESPN holding the right to exit its MLB deal next year, and sources indicating that it may do so (though if there is a bargain to be had, one can bet that ESPN will take it).

And it comes as ESPN’s parent company Disney is in the middle of its own big questions, with Pitaro cited as a potential successor to Iger. Asked whether the succession question has changed how he thinks about his leadership style, Pitaro said “absolutely not.”

“It does not change anything. I mean, I will tell you, without any hesitation, that I’m sitting in my dream job. I literally grew up wanting to work here, even the years that I was competing against this place, I wanted to work here,” he added. “We are in a really important time at ESPN right now, incredibly important. And it’s not just about flagship, but flagship is probably the most important new initiative that we are going to be launching, and I’m incredibly excited to be a part of it.”

To that end, ESPN has similarly sought to shake up its roster of on-air talent.

Last year it cut a couple dozen on-air personalities, including lead NBA analyst Jeff Van Gundy, and ESPN veterans Max Kellerman and Suzy Kolber. This year it cut football analyst Robert Griffin III and Sunday NFL Countdown host Sam Ponder, and sources say more changes may follow, though not at the same scale as last year’s cuts.

“We have to make a lot of hard decisions over time. That was certainly among the hardest,” ESPN president of content Burke Magnus said of the cuts.

Stephen A. Smith, the First Take host who has become arguably the face of ESPN, embraces the realpolitik of the TV business, never afraid to refer to when he was let go by the company back in 2009.

“Folks are not gone a lot of times because [of their] talent, they are exceptional talents who can do well in this business, and have done well in this business. But if you’re looking at the bottom line, the number-crunchers, the business individuals, the decisionmakers, they look at numbers,” Smith says. “I certainly never looked at anybody that I’ve worked with and said they’re the problem, I think we’re the problem, meaning that if our chemistry ain’t what it needs to be, then change needs to take place … We are judged by ratings and revenue.”

To that end the company has also added talent: Former Eagles star Jason Kelce, who will work Monday Night Countdown, and former Alabama coach Nick Saban, who will appear on College GameDay, among other new hires. And ESPN has leaned into big personalities, like Smith and Pat McAfee, with “authenticity” being a buzzword that feels appropriate for what ESPN is trying to do.

McAfee is a good example. The outspoken former NFL punter has an enormous following, particularly among young men (“it’s been staggering and really helpful to our brand,” Pitaro says of research the company conducted into McAfee’s impact on ESPN), and his show simultaneously runs on ESPN, YouTube, and TikTok, something unprecedented for the company (ESPN, it should be noted, licenses the rights from McAfee, who negotiated his deal directly with Pitaro and Iger).

He is controversial, and occasionally receives flak for his takes or his guests (don’t be surprised if New York Jets quarterback Aaron Rodgers returns this season), but he believes — and clearly many at ESPN agree — that his style is a critical piece of ESPN’s future.

“I understand that you have a lot of reasons to potentially hate me. I think they’re misguided,” McAfee told a group of assembled reporters at ESPN’s headquarters Aug. 28. “I would appreciate if you gave me and my guys a chance.”

“I have certainly fucked up numerous times in the entirety, but we’ve been given kind of an opportunity to reimagine what sports media can look like,” he added. “You can fire us, you can try to kill us, you can do whatever you need to do. But our success is the fact that we have a following, and they’re going to ride with us. And I’m incredibly thankful for that.”

And then there’s Smith, whose contract is up next year. The veteran newspaper columnist-turned TV and podcast superstar is remarkably clear-eyed about the state of media, and ESPN’s need to remain culturally relevant.

In a conversation with The Hollywood Reporter, he suggested that if he inks a new deal, “I don’t just think about ESPN, I think about Walt Disney, I think about Hulu, I think about FX, I think about a lot of things that I can contribute to.”

“When we talk about adapting, ESPN is adapting from the standpoint of looking at the media landscape, the advent of podcasting and podcasters, the digital stratosphere, YouTube becoming the new television platform in a lot of people’s eyes and adapting to the inordinate amount of competition that’s coming from other places and saying, ‘okay, how can we maintain relevancy and ultimately continue to stand afloat above the crowd?’” Smith adds. “That’s the challenge that ESPN has, and I view myself as a pivotal component to ensuring that that remains the state of affairs when it comes to ESPN and Walt Disney.”

And while ESPN’s mantra of “serving sports fans” is the embodiment of corporate humility, Smith’s persona is anything but humble.

“My objective is annihilation,” Smith says of his TV competitors. “Whoever goes up against me, I’m going to take them down. That’s what I’m trying to do every day, every week, every month of every year … I’m in the best shape that I’ve been in since I was 30, and it’s because I intend to annihilate. It’s that simple.”

“I’m glad I’m on late at night,” SportsCenter anchor Scott Van Pelt quipped after Smith finished.

It’s a dynamic that is, frankly, fun to watch. And it is something ESPN is laser-focused on, from the personalities to the debates to the wardrobe.

“I call it the toy department, it’s supposed to be fun, and I want our talent roster to have fun,” Magnus says, noting that he told Kelce that he doesn’t need to wear a suit if he doesn’t want to. “I don’t need him in a suit and tie on the Monday Night Countdown desk, he would look like he was going to a court appearance. I would like him to be comfortable in whatever he wants to wear, within reason.”

“Burke has done a fantastic job at putting the best people in the right places on the right shows,” Pitaro says of the adjustments. “I will also tell you that we feel like we have the best talent on the planet, and we have talent at scale … all of our folks are really resonating. We do regular talent research, and they’re really resonating with our sports fans.”

“I don’t want to overcook the word relevance, but we’re not going to succeed to the level we need to unless we really reflect the tastes of contemporary sports fans,” Magnus adds. “I would like our programs and by association, our talent roster, to reflect the widest variety of fans that we possibly can.”

But if ESPN wants to stay relevant, it needs the McAfees and Smiths of the world, and to develop a roster of personalities that are relevant to consumers who currently aren’t paying for linear TV, and creating a product that clicks too.

“If you look at my kids, Netflix, Instagram, TikTok, Fortnite, they’re incredibly distracted,” Pitaro says. “So how is it that we can make programs like Get Up and First Take that resonate with younger people?”

Or as Smith says about ESPN’s changing ambitions and priorities: “It’s not about figuring it out, it’s about staying on top of what we already figured out.”

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