Welcome to the second installment of Koo’s Corner, a column where I throw a bunch of topics, insights, thoughts, and scoops at you (or more like things I probably could have done full articles on but was some combination of too busy or too lazy to get around to doing). Let’s jump right into it.
ESPN’s Over The Top Network Efforts May Not Be What We All Envision
The biggest story coming out of Bristol with Bill Simmons gone and Grantland in the ground has been how will ESPN sustain its dominance as their cable distribution sheds a few million subscribers a year due to cord cutting. Many believe ESPN, and Disney by extension, are in a very tough situation here, as rolling out an over the top service (many believe would be priced as high as $30) may not actually help the network, but rather further cannibalize their cable/satellite customers cutting the cord. How ESPN deals with this has been viewed by some as the largest challenge the network has faced in quite some time.
But the prognosticated $20-$30 a month service for the network following the model of HBO, WWE, and others who have thrown all of their programming in a pay-for OTT service is actually not the way I am hearing ESPN is leaning.
Instead, ESPN would rather roll out a more limited and leaner service at a much lower price point, primarily focusing on content you would not find on television, but on Watch ESPN. One surmises that should such an offering find success, down the road more tiers of the service could be created to include studio programming and the larger ticket live rights events. That said, you have to imagine down the road the leagues and conferences might look to regain those streaming rights.
So how far away is this from happening? I don’t think we’ll see this in 2016, but maybe in 2017, although I imagine the amount of cord cutting over the next year or so will play a large role in when such a plan could be introduced.
Changes at HBO Real Sports for 2016?
I love HBO Real Sports. I have for a long time but feel it’s been REALLY good the last couple of years as it’s made an effort to adapt to the times, as I outlined here. 2015 was a banner year for the show in my estimation but I had some questions on the direction of the show going forward. Specifically, would Bryant Gumbel bring back his closing monologues which were scrapped in 2015 for guest comedy bits. Some of these were great but the format seemed to fizzle out towards the end of the year and with that in mind, I asked Senior Producer Joe Perskie what viewers should expect in 2016.
“This year we’re bringing back Bryant’s commentaries to close the show. He retired them at the end of 2014, but the viewers weighed in, so in the grand tradition of boxers and NFL quarterbacks they’re being un-retired. I think he’s excited about it.
“Doing comedy was obviously new for us, so it wasn’t easy, but it was fun and I think we got what we wanted out of it. We wanted to show the viewer something different, give people a laugh while also making them think, and draw attention to our anniversary. And we wanted to expose potential new viewers to our show, not just by tapping into the fan bases these comedians have, but by putting out something that was more digital-friendly than our traditional stories, something shorter and funnier that might reach new and younger people online. The Chris Rock piece generated more than half a million views on YouTube in just a day or two.“
A more pressing question for me was the status on the legendary Frank Deford. While Deford (a favorite of mine and an elder statesman of sports journalism) appeared in the December roundtable episode, I had noticed the 77 year old had been absent the other eleven episodes in 2015 (typical output for a correspondent is usually 2-5 features a year). Although Perskie’s comments below aren’t specific on how much Deford we’ll see in 2016, it’s good to know he’s still part of the team and hopefully we’ll see more of him in the coming year.
“Frank is still part of the team. He’s not carrying the same workload as he did in the past, and I couldn’t say what it will look like going forward. But when you have a legend like that on the roster, you tend to want to keep him in the fold for as long as you can.”
Edgier Sports Blogs Finding Untraditional Investment Partners
A couple of interesting moves happened the past month as The Chernin Group acquired a majority position in Barstool Sports and Gawker, Deadspin’s parent company, took its first outside investment in the company’s history, from Columbus Nova Technology specifically so it had added cash reserves as it approaches the trial with Hulk Hogan, who is suing over the release of a private sex tape. I hope at least one reader finds all of this as new news and is going “WTF?!?!” right now.
Both are very interesting, as tech investors have largely been slow to get involved with pure content plays and have been primarily investing in content brands that position themselves as hybrid platform companies like Bleacher Report and SBN/Vox who have typically had more reserved voices and broader/less tribal audiences.
I was able to speak with Mike Kerns, President of Digital at The Chernin Group, to learn more about the acquisition and their plans going forward. Some highlights below.
On if Chernin will be mostly focused on sports investments:
“If you think about sports in the context of just media in general, you could argue that sports is one quarter or more of just content. If you open up a newspaper and look at what’s driving subscription fees. Cable, if you look at ratings in general. I think it’s fair to say investing and acquiring businesses focused on growth and digital media, and we as a team have a lot of experience in sports so we’re certainly focused on sports, but it’s not a primary or sole focus.“
On why this wasn’t a full buyout of Barstool, an uncommon deal structure:
“We weren’t planning on going into much of the deal mechanics publicly. But we found out Dave talked about it on Periscope. So we decided we will certainly be as forthcoming as Dave is. What I’d say is, one, we don’t have a provision to buy the full business. It is our part of strategy at the Chernin group to buy, essentially control investment positions within companies. We’ve done with Crunchyroll and Fullscreen and we’ve done it with a series of smaller businesses within the Otter Media vehicle with AT&T.”
“Another part of the strategy is, unlike a lot of traditional buyouts of media companies or even buyouts of investors, we try to do it with entrepreneurs and teams that were very excited about working with it. Almost like the venture capital model. And we try to maintain meaningful ownership percentages for them so that they are aligned with us and how we grow the business. I think Barstool is a really good example of that where Dave’s going to maintain a meaningful ownership stake that is very similarly structured to our ownership stake, and we really view him as a partner and we are going to bring our expertise to the table and he will bring his expertise and we will help build a team around him to help execute our growth plans.”
On if Chernin would be more focused in content or technology platform plays going forward:
“I’m much more on the platform and technology side of the fence. I mean, look at my background. I built Citizen which was 100% based on traditional and mobile sports-based community on technology. It’s all technology though, we didn’t really employ any content creators at Citizen. While at Yahoo I managed all of our media technology businesses. I managed the homepage, Yahoo Sports, Yahoo Finance. I didn’t manage editorial, but I managed the product and engineering and I was the business owner while at Yahoo, reporting to Marissa. Certainly my bias kind of coming into the Chernin is that there’s a great opportunity for media and content brands digitally, but in order for them to succeed, they are really going to have to invest in distribution and monetization and user understanding, all of which are going to be controlled by platforms. Whether they are Facebook or Snapchat, or iOs, or Android. My background is a good representation of it, is all about how to think about getting the right content to the right people kind of regardless of the technology platform.”
Going forward it will be interesting to see where else Chernin sees opportunities within sports, but more, will sports content brands continue to find traction from VCs who may be warming up to the fact that content and scale of audience often serves as a great launching point to layer in technology platform products.