Espn, Fox Sports, Colin Cowherd discussed on Business Wars

Business Wars
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Automatic TRANSCRIPT

Horowitz, the producer who pumped up ESPN twos ratings with opinion powered shows like first take. This is episode 5. Undisputed. June 2015, Los Angeles. In a cramped neighborhood restaurant with red tablecloths, Fox Sports one programming chief Jamie Horowitz, and Fox Sports president Eric shanks, are on the hunt for talent. In the booth with them is Colin cowherd, the 51 year old host of ESPN radio's morning show. Right now, he's a hot property. ESPN and Fox are dangling multi-million dollar deals in front of him. Fox's latest offer is 6 million a year for four years. Cow heard edges forward in his chair. Here's what I know. ESPN feels too safe and comfortable for me. I don't care if I fall flat on my face. I like to be challenged. I like conflict. I like anxiety. And I'm tired of living in Connecticut. Then join us and be in LA. ESPN's already offered to let me do my show from here. What they won't let me do is my own podcast and parts of my radio show. Shanks interjects. We'll give you that ownership will also make you a studio analyst on our NFL pregame show. It's moving from Fox Sports one to the Fox broadcast network this fall. I like the sound of that. Or which looks cowherd in the eyes. You remember how it was when ESPN couldn't find a show for you and I said, no, no, no, let's make a show around Colin. Sure. Well, this will be like that again. Except this time I'm making a whole network around you. I want to build Fox Sports ones, whole daytime lineup around your show. Now, is that a big enough challenge for you? Cowherd extends his right hand across the table. Yes. We got a deal. The arrival of Horowitz and the defection of cowherd. Mark the start of another reinvention for Fox Sports cable networks. This time, as the home of sports opinion. And to mark the new direction, Fox Sports one and two rebrand as FS1 and FS two. Soon after comes the FIFA Women's World Cup, to fox's surprise, the women's soccer tournament is a raiding smash on FS1. The USA Columbia game alone brings 4.7 million viewers. Fox Sports executives see the sky high soccer ratings as proof that if they can get the programming mix just right, FS1 can peel viewers away from ESPN. But Fox now knows beating ESPN is not a slam dunk. When it launched FS1 and FS two in 2013, it thought it could rival ESPN in just three years. Now, it knows victory will take years of chipping away at its monolithic rival. Beginning with the arrival of the herd with Colin cowherd on FS1 in September 2015. Within weeks, cow herds early afternoon show as averaging 52,000 viewers. It's a small hall, but 40% more than FS1 used to get in that time slot, and every game counts. But even as Fox Sports chiseled away at its rival, cracks are forming in the foundations of ESPN's success. After decades of growth, people are cutting the cord with the cable and satellite services that brought ESPN into the nation's homes. And the trend is bad news for media stock prices. Disney weighed on the Dow after the world's largest entertainment company disclosed that sports channel ESPN had lost 7 million subscribers over the past two years. ESPN has historically been one of Disney's biggest profit generators. In 2011, 100 million homes could watch ESPN, and each one paid more than $6 a month for the privilege, whether they watched the Sports Network or not. But now, consumers who don't care about 24/7 sports are downgrading to cheaper cable packages without ESPN. Others are cutting the cord altogether in favor of streaming services like Netflix. ESPN is still the biggest cable channel of all. But news of the subscriber exodus sparks panic among investors. Media stocks enter a tail spin that wipes more than $22 billion off the value of Disney alone. For ESPN, the decline isn't as bad as it appears. Most of the cable cord cutters never watch the Sports Network anyhow, so add sales don't really suffer. On top of that, the fees ESPN charges cable providers are still rising fast enough to compensate for the shrinking number of subscribers. But with subscriber numbers heading south and competition from Fox Sports, pushing up the costs of sports rights and on screen personalities, ESPN needs to cut costs. It drops ESPN2 star Keith olbermann, lays off 300 employees and gives up the rights to NHRA hot rod drag races. There are, however, some costly battles ESPN can not seed. To block Fox from grabbing NBA basketball, ESPN agrees to pay the league 485 million a year, three times more than it paid under the previous deal. But Fox Sports is about to raid the ESPN.

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