ESPN and ABC Seize a Deal With NBA

The Business Week article "ESPN's Full-Court Press" discusses how ESPN's ratings are dropping and what President George W. Bodenheimer plans to do about it.  Ever since September 2000 ESPN's ratings have shown a decline in men averaging the ages of 18-49.  George W. Bodenheimer knew that ESPN needed to do something in order to improve ESPN's ratings.  Just last Thanksgiving Bodenheimer seized a deal along with ABC to outbid NBC for six years of National Basketball Association games.  This deal was worth $2.4 billion dollars, which is just over an entire year's worth of ESPN's revenues.

Bodenheimer knew that this deal could be one of ESPN's riskiest ever but he decided to go through with it.  Not only were ESPN's ratings dropping, but cable and satellite operators were whining about the high price tag that they have to pay for airing the network's fare.  "The fees are outrageous," says one senior cable executive.  "It's really soured the entire industry against them." 

ESPN hopes that the NBA deal will help ease the cable operators pain, but that is not for certain, because NBA ratings have dropped 40% since 1996.  Although Bodenheimer is sure that the NBA ratings will have a resurgence because with ESPN and ABC together, they will be able to broadcast as many as 32-75 more games a season than NBC was able to do in the past, and also sell more advertisements on both ESPN and ESPN2.

ESPN Experiments with Made-for-TV Movies

An accompaniment with the NBA deal is ESPN's own made-for-tv movies.  Next month on March 10th, the ESPN produced A Season on the Brink: A Year With Bobby Knight and the Indiana Hoosiers will make its debut on ESPN.  Brian Dennehy is starring as the famous and bad-tempered Bobby Knight.  ESPN has been promoting this movie for a couple months now and is looking for big time ratings and excitement from its viewers. 

Another new search for revenue is a late night sports variety show hosted by actor Jay Mohr.  Mohr who used to work for Fox Sports Net (one of ESPN's top competitors) will start his new show in April.  "It's smart to integrate shows it owns with programming it pays for," says consultant Neal Pilson, a former president of CBS Sports.

Click here for video clip of A Season on the Brink with Bobby Knight and the Indiana Hoosiers

ESPN Expands Beyond Regular Network

Even though ESPN already has six other U.S. channels, a Web site, a radio network, eight restaurants, and ESPN The Magazine, it still continues to look for more revenue outside.  ESPN's latest endeavor is an interactive channel on DirecTV Inc.  This channel will allow viewers to find out scores and news just by clicking their remote. 

Trouble with Cable Operators

Bodenheimer's improvement plans won't mean much unless the apprehension between the cable and satellite operators starts to relax.  Many operators accuse ESPN and parent Disney of squeezing them on price, since  

"ESPN is a virtual monopoly.  Backed up by Dinsey, it is a gun to the heads of cable operators."
Jerry Kent

ESPN Relating to Miles and Snow's Model as an Analyzer

MIles and Snow's Adaptive Strategies encompasses four different types of strategies which include defender, prospector, analyzer, and reactor.  ESPN relates very well to that of an Analyzer. An Analyzer is defined by Miles and Snow as a mixture between a defender (a very large firm with a stable product) and a prospector (a very small firm that is always looking for new business.)  An Analyzer maintains part of their structure in secure, stable market areas, while they are pursuing new opportunities in emerging markets.  Although seldom "first-in", they are fast followers. 

I believe that the way ESPN is very similar to an Analyzer at this point in time.  ESPN has part of their structure in a very stable and secure market and at the same time they are searching for new resources of revenue.  ESPN is a very large firm that has dedicated itself to several different areas of delivering sports entertainment, but also has dedicated part of itself to pursue new emerging market trends.  In conclusion, it is clear that ESPN would be labeled an Analyzer because although ESPN is making several billions of dollars they continue to pursue new opportunities.  Some examples, of this are the NBA deal, the made-for-tv movies, and the late night sports variety show that comes out later this year.