Bob Iger is making a massive bet with Disney’s enormous movie business. The Disney CEO is removing his most valuable films and shows from distributors like Netflix and will sell them directly to consumers, via his upcoming Disney+ service.
When it comes to Disney’s enormous sports TV business, though, Iger is being more cautious. For the indefinite future, if you want to watch ESPN, you will have to pay for it as part of a bundle, sold by TV distributors like Comcast or AT&T.
That’s because ESPN is a core part of the TV bundle, and even though the bundle is under attack, it remains too valuable for Disney to give up on anytime soon.
One day, though, you may be able to buy ESPN directly from Disney, via an app. Jimmy Pitaro’s job is to prepare ESPN for that future, while maintaining the sports programmer’s current status as one of TV’s most valuable properties.
Pitaro worked for Iger for eight years, running Disney’s digital and consumer product divisions, before he got the chance to run ESPN, a job he had long coveted. “I fought for this,” he says. After convincing Iger that he was right the person to replace John Skipper, who left abruptly in December 2017, Pitaro took over ESPN in March 2018.
Since then, Pitaro has made a series of subtle tweaks, designed to reassure both ESPN’s core audience and the leagues that sell ESPN its most valuable programming.
Under his leadership, ESPN has consciously steered away from programming and commentary that touches on Donald Trump, race relations, or anything else that might upset a theoretical viewer who wants the network to “stick to sports.” And Pitaro has made a point of courting sports league executives, who will need to decide which bidder to license their stuff to as their contracts come up over the next few years.
He discussed those changes in an interview with me last week; you can hear that conversation in today’s Recode Media podcast.
Meanwhile, as Pitaro is maintaining traditions and shoring up ESPN’s core business, he is also trying to build out its digital future. Shortly after he took over ESPN, the company launched its ESPN+ digital subscription service, which doesn’t offer the programming that ESPN provides to cable TV customers but has an assortment of niche sports like college lacrosse or Canadian football instead.
Over time, Pitaro says, ESPN+ will offer more mainstream sports as well. As it signs new rights deals, he wants the ability to put the most high-profile games on ESPN’s cable networks but move some stuff to the digital-only service too.
This is a tricky line to walk. Pitaro needs to make sure his TV network has its most valuable content — so he can keep pay TV subscribers, pay TV distributors, and keep advertisers happy — while also giving people a reason to spend an extra $5 a month to buy what his digital service offers.
And he has to do all that while people who like sports have an increasing number of options: Deep-pocketed TV competitors like AT&T and Fox are chasing after big-deal live sports rights, and you can find sports highlights — once the main draw for ESPN — on the internet without paying a penny.
Things could get even more complicated in the next few years if tech giants like Amazon, Google, and Facebook decide they finally want to get into sports in a significant way. If they want to, they could certainly outbid the traditional TV guys, just like Rupert Murdoch did in 1993 when he launched the brand new Fox TV network by buying NFL rights away from CBS.
Figuring out how to maintain an existing business while simultaneously building out a new digital one that will eventually replace the old one won’t be easy for Pitaro. But he’s in good company: It’s the same challenge facing every traditional media executive.
Below, we’ve shared a lightly edited full transcript of my conversation with Pitaro.
Peter Kafka: This is Recode Media with Peter Kafka. That is me. I’m here in Vox Media headquarters with Jimmy Pitaro, who is president of ESPN. Welcome, Jimmy.
Jimmy Pitaro: Great to be here. Thanks for having me, Peter.
Thanks for coming here and not making me come to Bristol, which was the original plan.
You’re still welcome.
I’m happy to come to Bristol.
Beautiful place. Beautiful campus.
It’s a slog. It’s a slog. Do you live up near Bristol at this point?
We relocated from Los Angeles to Westport, Connecticut, which is kind of right in between Bristol and Manhattan.
Yeah. Because you got to go to the Upper West Side occasionally, too.
Exactly. But most of my time is in Bristol, which is about an hour drive.
I think if you’ve listened to this podcast, you know that Jimmy recently took the job at ESPN, but let’s explain how that happened. You’d been at Disney for a long time. This job came up, what, about a year ago?
Fifteen months ago, yeah.
Fifteen months ago. Did you raise your hand right away and say, “I want to be president of ESPN”?
How does that process work?
So I’m a lifetime sports fan. I have some history in the sports media business. I was over at Yahoo, responsible for Yahoo Sports in 2006, 2007, before I took on some other responsibility there. But my goal was always to get back into the sports media industry. And I think in the first meeting I ever had with Bob Iger in 2010 we talked about the fact that the Walt Disney company, of course, owned ESPN and that could be something down the line that I could move over to.
So you initially went to Disney to run interactive?
Correct. Which at the time was one of five segments at the company, broken out separately. And so yeah, Bob hired me to go lead that group.
You said, “I’ll run your digital group, your interactive group, but one day I want to run ESPN”? You sort of flagged that early?
There was a conversation around the potential of me at some point moving over. I didn’t give Bob an ultimatum and say, “I’m going to join ...” I really wanted to join the Walt Disney Company and work for Bob, to be honest with you. I was quite happy at Yahoo. At the time, I had a ton of variety at sports, news, entertainment, and when I first sat down with Bob, I very quickly realized this is someone I wanted to work for. So I was more than thrilled to have the opportunity to go over and lead one of the segments.
And there was ... Well, there were multiple stories. I think I wrote one of them about you. At one point when John Skipper was running it, there was a thought that they would send you out there to sort of work under him and sort of with the idea that you’d be groomed to eventually take over ESPN. And basically, the short version is Skipper said, “No, no thanks. You stay in Burbank.”
Yeah, look, over the years, I don’t know ... That’s probably a conversation that happened, if it did at all, between John and Bob. I wasn’t, obviously, privy to that conversation if it happened. But I will tell you that over the years, Bob and I had many conversations around me potentially moving over to ESPN. I get my annual review, we sit down, and we have a conversation around what could potentially be next. And Bob, Bob knew how passionate I was about sports, not just teams and players, but sports media. I really love this entire industry.
So the job comes up, you’ve been looking ... You’ve been interested in the job for eight years.
It’s now open.
By the way, sorry, before you move on to that, more than eight years, when I was at Yahoo ...
You wanted it?
I’ve been a big fan of ESPN for my entire life. I grew up ... So it’s not just eight years at Disney, it’s my whole life.
Right. And so you have this recurring conversation with Bob Iger saying, “One day, this is something I’d really like to do.” Now that spot is available. Does he just sort of tap you on the shoulder and say, “Go for it”?
How does it work?
We had a conversation soon after John left the company around ... It was a high-level conversation, hey, let’s get together and talk about this. And so Bob and I had many conversations. I think it was over a three-month period, actually, Bob and I had many conversations and I fought for this job.
I’ve had the pleasure of working for Bob or I’d had the pleasure of working for him for eight years at that point. So I think Bob knew me very well. But at the same time, this is a really important part of the Walt Disney Company. This is a sprawling business and no one is just going to hand me that job. So I had to step up and demonstrate a vision for the company. How do we take this company forward? The company was doing quite well, but what’s next for the company? So I literally laid out a vision, I laid out ...
Was that a memo? Was that a presentation?
It was both. It was both. And I said to Bob, without having the benefit of being there on a day-to-day basis, but having the benefit of sitting at your staff meeting for eight years, sitting right next to George Bodenheimer for the first couple of years and then sitting next to John for the years after that, competing against ESPN for many years at Yahoo, I had a foundation and I had the luxury of understanding the successes and the challenges for ESPN.
So, I would literally, every Sunday, go on a three-hour hike with my wife and my dogs and talk about what I would do if I had this job. And I would crystallize my thinking and then I would meet with Bob soon thereafter and kind of further the conversation and say, “Look, if you give me this job, here’s where I think we need to go.”
This is during this three-month period, it’s not every weekend?
Correct. This is ...
Okay. I was thinking, your wife’s very patient 52 weeks a year.
No, no, this is while I was running Disney interactive or consumer products. This is during that three-month period. And so it was an opportunity for me to kind of crystallize my thinking, sit down with Bob repeatedly and walk him through and kind of flesh it out. So that if you fast-forward to the point in time where I actually got the job and did my first town hall, I felt very comfortable up on that stage talking about where I thought the company needs to go and giving the team some clarity as to what our strategic business priorities would be.
And so was there one major thing that, where Iger either said, “Oh, I hadn’t thought of that” or “Actually, I need you to go rethink this because you’re not going the way I want to go?”
No, no. There was nothing that I presented to Bob that he hadn’t thought of. But I will tell you that the two of us, I think, really rallied around this idea of audience expansion, and so of course direct-to-consumer was already a huge priority at Walt Disney Company and also at ESPN, and we were gearing up to launch ESPN+. And so that kind of went without saying, that it was [a] huge priority.
But as a natural extension of that, how do we attract a more casual fan? How do we attract a younger audience? How do we do more to attract women to ESPN? And so we spent a lot of time talking about the different initiatives that we could potentially invest in, the different types of content that we could invest in, the different rights that we could acquire to continue to make ESPN more relevant to these new populations.
So tell our audience — 2012, 2013, you guys have 100 million people watching or subscribing to ESPN, per Neilsen. Now you’re down to 86, per Nielsen as of last fall. How much of what’s going on at ESPN is structural and it’s about the bundle and about people cutting the cord or not signing up for the cord versus a specific programming issue that ESPN has or that sports has?
Well, there’s been a secular decline. You just cited, I guess those are Nielsen numbers.
For us, we’ve been very focused on I guess running parallel paths here in a couple of different ways but we, I believe, are still to this day serving the core sports fan very very well. We made some adjustments in terms of what we’re putting on air, some real tactical examples like some tweaks to a show like Get Up, which, when it launched, was somewhat criticized in the media.
It’s a morning show?
It’s a morning show.
Yeah. At the time it was airing from 7 to 10 am. We condensed that to 8 to 10. We picked up the pace of it. We made some changes in terms of who was in the studio and bringing in some more experts. Anyway, it’s just one very specific example of a change that we made that I think has really helped us in terms of serving the core sports fan.
And if you were to look at our research, I think you would see that we are doing quite well with the core sports fan. So I wouldn’t say that the declines that you’re mentioning are connected to something necessarily beyond the secular decline that you mentioned.
I mean, just everyone is going down, everyone’s subscriber base is going down for the same reasons we’re talking about. It’s not specific to sports and it’s not specific to ESPN.
Yeah. I think, look, people have many more options right now than they did five, 10 years ago. And by the way, the options aren’t just on the sports and entertainment video side, the options are — and I think many of my peers in the industry have talked about this — gaming, you know, Fortnite.
Right. Anything on your phone.
Anything on your phone. Exactly. And so there are a finite number of hours during a given day that people can engage in entertainment, sports and entertainment.
So going back to that conversation you’re having with Bob Iger over three months and your poor wife for every weekend, was there any hesitation on your part that ESPN had for a long time, was the most powerful really programmer period. Enormous amount of money. It was able to spend an enormous amount of money to buy sports rights. It seemed impenetrable.
And then the last couple of years of John Skipper’s tenure, it became this sort of question mark for Disney. Maybe it should be split off and it was dragging Disney down and maybe they weren’t going to be able to afford the sports rights they’ve paid for. Was there any hesitation on your part that, “Ooh, maybe this is a problem that I’m taking on”?
No, none. I would say, look, the conversations that Bob and I had were more about the importance of having a direct relationship with the customer. And we talked a lot about the importance of having that data and being able to serve a personalized experience. That was really a big chunk of the conversations, is how do we generate this data? So that we can be this — or continue to be this contemporary media company. And when we say contemporary, modern media company, I think in large part what we mean is having the ability to serve the right content to the right user at the right time.
And so what we ultimately decided to do was — and what we’re doing today is — running parallel paths. We are continuing ... By the way, the vast majority of US television households still have that multichannel bundle. And they’re getting great value in terms of depth and breadth of content. And by the way, we continue to invest as we acquire new rights, we are looking for new content for that platform. We are developing original content from our content group for that platform.
For the traditional bundle?
For the traditional bundle. Exactly. At the same time, we want that direct relationship with the customer for the reason I just mentioned. We want the data. We want to be able to personalize and so ...
You’re going to get that through selling them this ESPN+ product?
But they’re two very different things, right? One is the stuff you sell through Comcast or Hulu, any version of that bundle. That is the stuff where you spent the most money to buy the most rights, any premier product you have, they’re going on there, right?
NFL or ...
NBA, etc. Right. ESPN+, at least for now, is sort of stuff that you’re not putting on a ...
They’re complementary. Correct.
It’s an add-on, right? So it’s for hardcore sports fan or someone who wants a very specific thing that isn’t being served up to 86 million other people. So you can only get data about those folks who are really sort of at the end of the bell curve. Like the most ardent sports fans or they love lacrosse, or they love this specific college, whatever it is.
Compare that with what Disney is doing with the Disney+ product where they’re saying, we’re taking our most valuable programming stuff we sold for a ton of money to Netflix and other outlets, we’re bringing it all in and essentially you’re going to come to us to get it and that’s going to be the one place to get it. It’s a very different approach with what’s going on at ESPN. Do you think at some point... I’m just soliloquy-ing now, but do you think at some point ESPN follows that path where the premier product is the thing you can also get directly from you guys or is it always going to be wholesale through a Comcast or a Hulu?
Look, we have a great product in market right now. The product really works. If we decided to go in that direction, we’re set up for it because of the ESPN app, which by the way, we relaunched at the same time that we launched ESPN+. So there’s some confusion in the marketplace that ESPN app and ESPN+ are the same thing. We relaunched the ESPN app, which is the home for all of our content, including when you authenticate, including free content.
But you built this ramp so you can do this if you want, or if you have the ability to.
We do have that option. Now, just to back up, Peter, for a second. I will tell you that the UFC deal that we did, that is an ESPN+-focused partnership.
You went and spent a bunch of money on ultimate fighting and you’re saying the bulk of that is going to go on the ESPN+ ...?
The vast majority of that content, including the pay-per-views, are on ESPN+. We have a fantastic partnership with the direct-to-consumer international segment at the Walt Disney Company. We are very aligned on the strategy there, so I would just go ...
Just to back up for a second, I will tell you when we are out there acquiring rights, we are not always first and foremost looking through the traditional television lens and I think the UFC is a great example. Top-ranked boxing is another example. These are major media rights that we’ve acquired really with a focus on advancing the subscriber base for ESPN+. Now, as we move forward and these rights come up for renewal, the rights that you’re talking about ...
All of those major sports rights, we are 100 percent focused on acquiring rights also for the ESPN+ platform. A couple of smaller examples over the past couple of months, when we did the AAC deal and we did the The Big 12 deal, those rights have material ESPN+ components to them and you will continue to see that as we move forward.
But you’re still going to put the stuff that has the biggest audience, the most potential, on the main cable?
I don’t know the answer to that. I will tell you that ...
I would assume, by the way, that people who are selling you those rights want you to do that, right? I’m sure the NFL, by the way, wants its games to be on ESPN or ABC, not on ESPN+.
They want the broadest exposure possible on the most reliable platforms. I think if they were sitting here right now, they would say that. And by the way, we can give them that. I think they know that. So I very much like our hand in that department.
If you look at the ... I don’t want to digress here, but if you look at the competitive landscape, there’s been a lot of commenting around the challenges that we are facing today and that we will continue to face. What I will tell you is that we’ve always had competition, but we really like the place that we’re in right now in terms of the amazing reach and scale across our digital platforms, across our linear platforms. The fact that we can bring a broadcast network and several cable channels to the table at the same time. The fact that we have the Walt Disney Company synergy engine. The fact that we have the best production team in the business.
When I think about a future where we’re sitting down with the major leagues to negotiate renewals of our existing deals and potentially acquire additional rights, I really like the situation that we’re in.
I was going to get to this eventually, but I might as well ask now. What do you think the odds are? This is a perennial question on this podcast. I write about it all the time. What do think the odds are that the NFL or the NBA takes some of its premiere most-valuable stuff and sells it exclusively to an online outlet? A Google or Facebook?
You mean for the next round?
I think that the odds of that are low. Just to go back to my point before, I think if they were sitting here right now, they would tell you that their job, like our job, is to expand their audience. They want to attract as many people, they want to grow awareness, they want to grow affinity for their respective leagues. And again, no different than our focus for ESPN. Will they do something exclusive? I don’t see that, just because we bring so much value in terms of ...
And/or just that they’re conservative, right? That they’re worried that if you could move a Steelers game to Amazon or whomever and x percent of people have trouble streaming it or can’t figure out how to turn on their box, they just don’t want to deal with it at all.
The stability issue. Yeah. Now, will stability still be an issue in five years? I don’t know. I don’t know. I will tell you that ESPN+ is is very stable. It’s a fantastic product. But even beyond the stability issue, I will tell you again, the power of the ESPN platforms, and I’m not just talking about television, I’m talking about ESPN.com, the ESPN app. All of the content, the content engine that we have to drive value, this is a rising tide. So if I’m a lead executive, I’m thinking really long and hard about not having ESPN as a material component of our ecosystem.
What’s your favorite online time-waster when you’re not working?
That’s a really good question.
Check your email, check the site...
No, no. The next flick on your phone is to ...
That’s kind of work, right?
Kind of work, but kind of entertainment. I’m a huge Yankees fan.
Are you on Insta? Can we follow you on Insta?
I don’t ...
Or are you “locked?”
I’m not really posting on social.
I’m consuming. Exactly. But I’m an insane Yankee fan. So, I’m, 162 games a year, following the Yankees.
And you grew up around here, right?
I can hear it in your voice.
I grew up right outside of the Bronx in Westchester County. Maybe 15 miles north of the stadium.
All right. So I can allow you your Yankee fandom.
That’s a gross team to follow, though.
It was, the Yankees were on every night at dinner.
It’s like being a fan of GE. But that’s all right. I’ll grant you that.
By the way, it’s all in the family. My sister is a senior lawyer at Major League Baseball. So, we are a baseball family. We love all sports in the Pitaro household, but ...
So you’re a fan of baseball. We were talking before we left about sort of the pitch you’re making to the leagues. And I wanted to ask you about the relationship with the leagues in general because there’s been a lot of stories, and I think you’ve talked about this out loud publicly, about one of the things you wanted to do when you took the job was to sort of repair, or fix, or whatever the right metaphor is, whatever the right verb is, the relationships with the leagues.
That always confused me, because it didn’t seem like John Skipper was running around antagonizing the NFL. You guys were spending billions of dollars a year on those rights. What’s the difference between his approach and your approach?
Look, again, the word I would use is continue ... the words I would use ... continue to advance the relationships. I’m certainly not going to be critical of my predecessors at the company.
Okay. So let’s take John out of the picture. What needs to be fixed or advanced or ...
Look. Let’s just take a step back. We know the power of live sports in a world where so many things are down. If you look at our content across the board in terms of live events, Major League Baseball was up last year. NFL was up, I believe, around 8 percent last year. I’m speaking about ESPN in general. But the entire league was up. College basketball was up for us, 15 percent or 16 percent this season. UFC is up anywhere from 75 percent to 100 percent year over year. Live events are incredibly valuable. And so much ...
And they’re incredibly valuable to ESPN, right? It is the main thing that differentiates you and somebody else.
Incredibly valuable to ESPN, and incredibly valuable to our traditional partners on the MVPD side.
Because no one’s actually paying ... I mean, if you talk about the morning show you were doing, right? And that’s a nice thing for you guys to have. But it’s not the core of getting ESPN, because you want access to the NFL and the NBA.
I wouldn’t even go there. SportsCenter is incredibly valuable. It’s incredibly ...
But it used to be the main thing that was on ESPN, and over the years your predecessors took all the money they had and used it to buy sports rights. And that became the main driver for ESPN.
Live events are absolutely the main driver. But I will tell you, if our head of sales, ad sales, was sitting here right now, she would tell you that SportsCenter is an incredibly valuable asset. She would tell you that Get Up is a valuable asset. That’s been growing for us.
We’re just agreeing that live sports drives what you guys do.
Right. So, just to bring it back to your question or your point, when these deals come up for renewal, we want to be in a very good place with our league partners. We want there to be a mutual trust. We want there to be credibility. We want them to want to continue to engage with us. So that’s really the driver here. For me, if I’m going to spend my time on anything, it’s going to be on making sure that we are in the best position possible to acquire live rights.
What does that mean, right? Because your money is as good as someone else’s money. Right? And presumably, you have more money than some of the other bidders. Again, like you’ve explained, they know who you are. In the end, isn’t whoever’s going to write the biggest check going to win? And if not, what do you ...
I don’t think it’s that easy.
What do you need to ...
I don’t think it’s that simple.
So, take the NFL for example. Is that a matter of, you need to work closely with individual owners? Make them more comfortable? Is it a Roger Goodell thing? And how do you do that?
Look, it’s spending time with most of the league executives. I would say it’s less about individual owners. Our relationships are with the league executives. And I will tell you, there are weekly phone calls, weekly meetings with all of these.
I think the NFL gets a disproportionate amount of attention. Right or wrong, for whatever reason, there was a perception in the industry that the relationship between ESPN was strained. I can’t comment on that. That predates me. I will tell you that we do spend a lot of time with the NFL league executives. But we spend a ton of time with baseball executives, NBA...
I was just using them as an example. But, in your mind, that was the thing that you wanted to do more of. We want to get more face-time with these guys. We can’t just write them a check and come back every couple of years.
Exactly right. And so, that means continuing to demonstrate to them what we bring to the table. But also, continuing to focus on what I’ll call the spirit of innovation. And working with them to get alignment on the necessity of trying new things.
An obvious example of that is putting mics on players. Bringing this all together. As we talk about expanding our audience, one of the things that we think we should be doing is giving the younger generation more access to players and coaches.
And this isn’t incredibly novel. The NFL has been doing it for many, many years. But we see that type of access resonating with the younger generation. Yes, the younger generation still loves their highlights, and they love the personalities that we put on air. But what we’re also seeing is, they want access and authenticity with athletes and with coaches. So when we’ve experimented in this department, and put a mic on Mookie Betts in center field with the Boston Red Sox, we see that kind of thing resonating. Kyle Lowry during the pregame ...
And that’s the kind of thing you get through having more comfortable relationships.
Yeah. Through trust.
Having them have more comfort with you.
Through trust. And them kind of embracing this spirit of innovation and trying new things. There’s so many examples, Peter, but the partnership that we have with NBA advanced stats and second spectrum, where we’re doing alternative broadcasts, I think the NBA trusts us, in terms of going ahead and not just doing the primary broadcast on ESPN or ABC, but also doing something alternative on ESPN+ or ESPN 3, where we are offering different modes, different options for our fans where they can actually see some kind of graphics on the screen that show players’ shot probability, where they show different play diagrams, where they show animation. Someone throws up a brick, they actually see a brick on the screen.
That type of thing, again, what we’re seeing is, it does resonate with the younger generation, and so, again, because I think there is that trust with the NBA, they’re very inclined to partner with us and try new things.
So these are your partners, right? You’re spending a bunch of money with them. They’re selling you a product. Same thing as Turner buying a show from whatever studio, right? It’s a very straightforward relationship. What’s different about you guys is, you also have a news arm that’s writing about the individual games, but also the leagues, and you do some very fine journalism there.
Again, with football occasionally, this has been the biggest flash point, because I think it’s sort of the most troubled sport, right? In terms of concussions and abuse. What kind of message are you getting from the NFL about that coverage and whether they want to see more of it? Or, I’m sure they don’t want to see more of it. Whether they’d like you to do less of it.
I haven’t received one phone call from any league partner about our, what I’ll call investigative reporting, or enterprise journalism. Hard stop. Been in this job for 15 months. I think there was some noise in the system that, potentially based on my league relationships that I would get those phone calls, and that as a result I would make changes to our investigative reporting unit. The answer to both is no. I have not received the phone calls, nor have we made changes.
My job, and full disclosure, this is not easy. It’s probably one of the harder things that I have to do, is make sure that we are continuing to cover these more sensitive issues. And do so in an exemplary fashion. At the same time, manage league relationships. But again, I will tell you that no one from any league is calling me to complain about the fact that we are being unfair in terms of our news reporting.
Is it the kind of thing where they don’t have to call you and tell you because it’s already sort of built in to your head? Like, “Hey, we can run this story about CTE, or we could try to make a better bid on NFL rights in a year or two.”
Look, we are not shying away from those tougher stories. I will tell you flat out, we are not. And I think, if anyone from our investigative unit was sitting here right now, they would reiterate that. If you look at, just the past couple of months, we have had several stories that have been critical. They’ve been honest, and fair, and balanced. But at the same time, they have been critical. And again, no one’s calling me to complain. That’s the good news.
My job is to make sure that we are the place of record. And I really mean that. So when something happens in the sports industry and you tune into ESPN, you need to get it. Our job is to inform you. Our job is to serve the sports fan any time, anywhere. And that, in my mind, includes investigative reporting.
Something else that you’ve talked about, I think publicly, I think Bob Iger’s referenced it, and certainly it’s come out in the coverage of your regime, is a move away from — people use various euphemisms — but away from having social commentary, political commentary. Again, I know you don’t really want to reference John Skipper. But he made a point of promoting diversity on air, made a point of saying that it’s very important to serve specifically African Americans. I’m conflating a couple different things. But you guys have clearly sort of moved away from talking about societal stuff and political stuff on air, on the site.
Yeah. So, look. Start off by saying, we have not moved away from diversity on air as a priority. Diversity in general at ESPN is an incredibly important priority for us.
But to put a fine point on it, right? Like John had said specifically, he’d taken a version of SportsCenter and basically put two African Americans on and said, “We want this to sort of be our hip-hop-inflected show. We think we want to court that audience.” And basically you guys would pull back on that sort of program.
Look. We have not pulled back on the intersection of sports and culture, sports and politics. If there’s something that happens out there that is at that intersection, we will absolutely cover it. And we will cover it in an exemplary fashion. Period.
What we don’t want is people to tune into ESPN, or people to tune into an ESPN feed on a social platform and get pure political commentary. We don’t believe that that’s who we are. We don’t believe that that’s why people tune into ESPN. And by the way, we’ve talked about this a bunch in the past, but we try to make as many decisions as possible based on data. And we’ve done a lot of research in this area and our fans have told us that this is not why they tune into ESPN.
Do you think that’s people who have a certain political bent saying, “I don’t want to hear anti-Trump stuff.” Or is it people saying, “I don’t want to hear about politics in any form”?
What we hear is that, sports are supposed to unify. Right? And that means ESPN is supposed to unify. That’s the approach that we’re taking.
But sports has always intersected with race and with politics over the years. And especially in the ‘60s. Right? ‘68. Muhammad Ali and Cassius Clay, right?
By definition, it’s political in a lot of cases. So, to sort of say that “sports is entirely separate from the rest of the world and has nothing to do with politics” seems difficult to imagine. You see it periodically, right? Every time a sports team now wins their championship, the question is, “Are they going to go to the White House?”
Right. And by the way, that, in my opinion, is sports news. And we will cover it, and have covered it. That White House example was a good one. That is part of what we do, and we’ll continue to cover it.
So your distinction is, “We’ll write about whether or not the Red Sox are going to go to the White House” — or whatever the team is — “but we’re not going to encourage” — Jemele Hill no longer works there — “Scott van Pelt to talk about how he feels about Donald Trump.”
I wouldn’t even say we’re not going to encourage Scott to talk about. It if Scott wants to talk about, he’s going to talk about it. If he believes that it’s sports news and his fans want to hear about, he’s going to talk about it. The same goes for all of our programming.
But again, so that’s a clear thing that you wanted to change when you got there. That was a clear sort of, “We’re going to turn the dial.”
Yeah. I would say that that’s an area of focus of mine. But again, just to reiterate, we have not over-rotated here. When there is that intersection, and we’ve been clear with our team on this, we’re going to continue to cover it.
We talked about this a little bit in this conversation. You and I were talking off-air about our kids. We got kids. We know how they’re consuming media. My kids, sadly, don’t like sports at all. Maybe that’ll change one day. They’re spending a ton of time doing non-sports stuff on their phone.
And then you talked about Instagram. Right? House of Highlights is a huge success, 10 million or however many subs. It’s not a straight highlight reel, but there’s a whole lot of highlights there. I’d say it’s really good. I can catch almost all the important parts of the NBA playoffs through my Instagram account right now.
How do you program against that? How do you accommodate for that? It’s the real world. You can’t stop it. Whether those rights are sanctioned or not, that’s going to be on someone’s phone. As a network that used to make a lot of money packaging those clips, how do you deal with that?
Look, there was a moment in time at ESPN where there was a lot of attention placed on that exact question. And I think, at least in part, some decisions were made along the lines of, “Hey, we now have to try some new things, because highlights are becoming more of a commodity and they’re available everywhere. So, let’s mix it up.”
And if you fast-forward to today, Peter, I will tell you that we believe that when you tune into ESPN, you’re going to get more than just ... we know you’re going to get more than just highlights. You’re going to get highlights with personality.
Again, just going back to my point before, as the place of record, you tune into ESPN. Yes, you’re getting highlights, but they’re part of a broader package. If you’re tuning into SportsCenter, you’re not just getting highlights. You’re getting analysis, and you’re getting it through great on-air talent with really compelling personality. That’s our focus, and that’s, I think, how we differentiate from a highlight experience on Instagram.
Do you think that applies sort of generationally? Or do you think, “Look, we’re just not going to be ...” I’m sure you’re not going to tell me this, but I’ll ask anyway. Do you think there’s just a 15-year-old who’s just not going to be able to watch ESPN because he or she has all their needs sated on the internet, and what you’re really doing is sort of doubling down on the audience that already knows who you are, is used to watching you?
If there is a 15-year-old out there that doesn’t need ESPN right now, we are not throwing in the towel on that 15-year-old. Instead, what we’re doing is, we’re looking at what we can do to bring that 15-year-old in. And what we’re seeing is that, yeah, they’re interested in highlights and some of our competitors are doing a nice job on these third-party social platforms.
At the same time, they’re really interested in getting more access to athletes. What we’re doing now is, we’re starting to — this is actually not new — we’re continuing to develop our relationships with athletes. We want to have athletes look at ESPN as the platform where they can tell their stories, and in different ways. You see what we’re doing with Kobe Bryant and Detail, which has now extended to Peyton Manning and his version of Detail.
I’m going to break down this play, this player for you.
Exactly. But it feels intimate. Right? When you’re tuning in, you feel like you’re not just getting a breakdown of the play, to use your words, but you’re getting some access to Kobe or to Peyton.
These are things that, in theory, Kobe or Peyton, or Kevin Durant, who you’re also working with, could all just do through Players Tribune.
Or they could do through Instagram. They could do it on their own.
Do it on their own.
Some of them are doing simultaneously, right?
LeBron James has his own media company, he can go direct. Doesn’t need to work with you or Sports Illustrated. How do you convince them to work with you as well?
We want them to look at us as one of the platforms through which they can tell their story. Not the only platform, but we want them to look at us as a place where we will be creative. We will be innovative. We will not just take their ideas, but we will give them ideas and suggestions. A true partnership. But again, a platform with scale. That’s one of the things that they, I believe, have recognized and will continue to recognize, is the great reach, the power of the ESPN brands and platforms.
Right, because in theory the internet is global, could reach anybody. You could say, if you’re Kevin Durant, you could set up shop and reach literally billions of people. But you’re saying look, in the real world we have this apparatus and people are engaged with us and it means something to be attached to our brand.
So, look at what we did, or what we’re doing with Detail. That is a product, that is a show that lives on ESPN+. However, we are consistently taking chunks of Detail and putting it on linear. Taking a specific highlight, weaving it into, for example, our SportsCenter programming and using that to drive back to ESPN+. So if you’re Kobe or Peyton Manning and one of your priorities is to expand your reach, what better way to do that than through the multi-platform experience that is ESPN?
Let me ask about sports betting and how you guys are thinking about that. It’s now legal in some states, it’s going to be legal in more states. You guys have always sort of referenced sports gambling in some way or another, but it wasn’t the direct sort of thrust. And there’s various approaches, right? Fox is literally going to start taking bets next fall through a company they acquired. You guys are doing ...
I don’t know if they acquired it. I think they invested in it.
Invested in. That’s correct. You guys are sort of in the middle ground, right? You’re not going to be involved directly in betting but you are going to create more programming around betting?
We serve the sports fan and that includes the sports fan that is interested in sports betting information. Getting more educated in that area. And what Bob has said consistently, what I’ve said consistently, is the focus there is going to be on news and information.
And so, to your point, yes, we’ve been in this space for quite some time now. We have podcasts, we have a show on ESPN+. Scott van Pelt has “Bad Beats” as part of his midnight SportsCenter. We had a product called “Insider.” We just had this content, kind of throughout all of our experiences, online and on air.
And so, you fast-forward to today and yes, I think it’s fair to say that this has become more of a priority, but more of a priority looking through the lens of news and information.
So does that mean you think of this as a discrete thing and if you’re interested in sports betting you’re going to watch this show as opposed to having it being woven into the broadcast or referencing the line? Because there’s a world coming in which you’re going to be able to bet live during the game. And there could quite obviously be a place where you guys are discussing odds while the game is going on and it gets woven directly into the telecast.
We’re not there yet. We’re not there yet.
But how do you feel about that idea? Or do you want to keep it separate, like this is watching sports, this is betting on sports, they’re separate things?
It’s a good question. For now, we have decided to keep it separate. If we were to ever enter into that space, meaning including that information as part of a live event, we would only do that in partnership with the leagues. We would never just throw that content up. But again, we haven’t even had those discussions yet. All our focus now is on a show like The Daily Wager.
Do you have any pause about the addictive nature of gambling and lots of people can do it and it’s fine and it’s entertaining, a lot of people do NCAA pools, etc.? But there’s clearly a segment of the population that probably struggles with it in the same way they struggle with alcohol or smoking or drugs. Does that concern you at all?
We are going to do this responsibly. We will have public service announcements on air. When we take local advertising — and I emphasize the word local — because it would have to be geo-targeted online or it would have to be ...
Right, New Jersey but not New York.
Exactly, it would have to be served up locally through radio or local television. We would make sure that we are including appropriate warnings as part of those advertisements.
I just meant you personally. Do you have any ... because we’re at a moment now where we’re spending a lot of time talking about phones and digital and whether we should be spending less time with these and maybe we should move our kids away from phones. Meanwhile, you’re watching all the media companies sort of embrace sports betting. It seems like the two things might be sort of dissonance there.
We talk about it. We absolutely talk about it internally. I will tell you that, just to take it back, our mission is to serve the sports fan. And all of our research shows us that the sports fan is very interested in lines and spreads and this odds information. And so, we feel like it’s a natural extension of what we’re doing.
Yeah, I guess the argument would be, just pretending that it doesn’t exist is silly too, right? And you guys have worked out a fantasy — a fantasy [strategy] you guys have been running, whatever that information along the bottom of the, all the networks have been doing that for a while.
Well, so I don’t have the exact number but our research department presented me with some data a couple weeks ago that said that something like 60-70 percent of people placing bets are already watching ESPN.
Right, so you’ve got the audience and you’re just giving them more stuff.
We’ve talked about betting, we’ve talked about politics. Spent a lot of time on sports rights. A couple more sports rights questions: Are you guys going to bid on Sunday Ticket?
Bob Iger was asked that question on an earnings call. We’re in exploratory mode right now.
This is sort of the next big NFL sports rights bucket that is coming up.
Yeah, it’s one of them, I believe. But we’ve had some exploratory conversations in that department. In general, football content obviously resonates incredibly well across our platforms and with our audience. It’s a big part of what we do, it’s a big part of who we are. So we are very interested in acquiring more football content.
And just overall, right? Every year, sports rights go for bigger and bigger sums. As we talked about at the beginning, sort of the base audience for you guys but everyone in the traditional TV world is shrinking. Do you think at some point collectively, the people who are interested in buying sports rights say, “We’re not going to pay an increase, we’ve capped it?”
Well, I’m not even quite sure that’s legal.
They can’t collectively say that?
Look, I think that you have a couple things going on here. You have more people interested in sports rights, you have more companies interested, and you have more platforms out there, it’s kind of the same thing ...
And all the internet guys, Asia guys.
But I think there’s been a lot of focus on the FAANGs but probably not a lot of focus on some of these smaller sports startups that are out there that are well funded and very interested ...
One of them’s run by John. Very interested in acquiring sports rights. So if I’m a league executive, if I’m a conference commissioner, I like the world that I’m living in right now. Again, I said this already, with all that said I still very much like ESPN’s hand as we navigate through these waters.
Do you expect that you’re going to pay more? Whatever rights package you have now, do you assume that that will cost you more the next time you re-up?
I don’t know. I honestly don’t know. I don’t have a crystal ball. I will tell you that we are going to, first off, we’ve always operated with discipline. We have the best rights acquisitions team on the planet, run by a guy named Burke Magnus. He’s got a fantastic team under him. That team has always operated with an incredible amount of discipline. That being said, we of course acknowledge the fact that it’s not getting any easier for us. There are more competitors and the value of live sports is only going up.
Because for a while, you weren’t there, but it kind of seemed easy for ESPN, right? They had this sort of chokehold on sports, they were drowning in cash and they could outbid anybody they wanted to and if they decided they wanted to make sure that Fox couldn’t get anything valuable, they could just buy all the rights.
I wouldn’t characterize it as easy because ...
And they wouldn’t either, but ...
There have been many competitors in this space for many years. But again, the team has operated with discipline and that has meant that some of the rights that we were interested in, we did not acquire because it was just too costly, so we haven’t been out there just buying whatever’s available.
You referenced ESPN+ a bunch. It was launching as you took the job, so you couldn’t sort of tweak it.
It launched after I got the job, so I started March and we launched in mid-April.
Right, but at the meeting you weren’t going to do any significant changes at that point, right? I mean, you didn’t ...
I sat in on product meetings right out of the gate. But yes, you’re right, in terms of the content that had been developed, the rights that had been acquired, that predated me.
So now that you’ve had time to sort of sit and assess and figure out, are you tweaking it in any significant way?
Of course. We’re always tweaking, we’re constantly updating the app. So the two big categories here, right? There’s content, which is rights acquisition and content development. We’re constantly tweaking, constantly out there trying to acquire new rights. We’re also, Connor Schell’s team is creating content specifically for that platform. That’s going quite well for us.
And then on the product side, this is the direct-to-consumer and international team, some of the best engineers — and I come from Yahoo — some of the best engineers I’ve ever worked with, both on Aaron LaBerge’s team and on the BAMTech side, incredible group of product and technical employees executives that are focused on continuing to advance this product. And I sit in product meetings regularly and have been blown away by the advancements that we’ve made.
Was there something in the programming side that has taken off in a way you didn’t expect?
Programming, you mean the content that was living on … ?
Yeah. Something that’s on ESPN+ that you thought, “Oh, I had no idea there was that kind of audience for that and they’re paying a lot of it or they’re converting it at a much higher rate than I expected?”
No, there isn’t. Nothing has really caught us by surprise. I think we’ve actually done a really good job at forecasting how the individual live events would resonate and how our content development has resonated. I think one of the things that I love about this product is that if, for example, you are super interested in our 30 for 30 series, the only place that you can get it is ESPN+. When I say get it, I mean exhaustively.
Right, it used to be on Netflix and you’ve pulled it back.
So, yes. There’s only one place to get that content right now if you want every 30 for 30. And so I think as we move forward, we’re going to really get that message out there. We’re going to highlight the fact that there are certain types of content that you can only get within this service, and we think we have an opportunity there to move the needle.
Before we go, I just want you to explain to people how you got into the business. You’re one of many people I’ve met who used to be lawyers and aren’t. So there’s a period in your life where you were a lawyer.
And then you were an internet guy. How did that happen?
So I was a litigator in Manhattan. I met and married an actress and her career took off.
Still married, you can reference her.
Yeah, we are still married. Her career, she’s been working since she was 11 years old, consistently, and so there came a point in time where it was hard for her to be in New York and have to pass on opportunity after opportunity. So we ultimately decided that we would move west. Soon as we did, we had a pit stop in Vancouver where she was doing a show for NBC, and then moved down to Los Angeles after that show got canceled and she signed what’s called a talent holding deal with the CBS network and that put her on a show called Yes, Dear that was a hit out of the gate. So I then knew that we were going to be in LA for a while.
You’re the tag-along now?
Yeah, exactly. And proud of it. Proud of that fact. But I then started to look for legal work in Los Angeles and met a guy named Dave Goldberg, who turned out to be one of my closest friends on the planet. And I became a lawyer for his music startup called Launch.com. I had done some internet litigation when I was in New York City so I had some kind of an internet background, so he brought me on board.
But this is so long ago that Launch.com’s main idea is they were distributing DVDs and CDs, right, in the mail?
Yeah, you have a good memory. I’m impressed.
Yeah, I remember getting those things.
So yes, but at the same time, a year after that, a year after I started, if you look at what Launch.com was, it was Pandora, Spotify, and Vevo. All of those services were part of the Launch enterprise. Ultimately, Launch got acquired by Yahoo. Dave left soon thereafter. I stayed because they gave me the opportunity to run Yahoo Sports.
So that was kind of my big break, if you will, where I was a lawyer doing business affairs work and some litigation. And then the person who was running the media group at that time got to know me a little bit, the Yahoo Sports job opened up and he asked me to stretch and move out of business affairs and into a GM role for Yahoo Sports. So that was what happened.
So you have been in the internet for a couple decades, so first web boom all the way up until now. Is there anything about having that perspective that ... hang on, let me flip it around. So right now all the internet companies are focused on millennials and younger folks. Is there stuff where you think, “Oh well, this stuff worked for us a Yahoo, at Launch.” And someone has to explain to you, “Jimmy, it doesn’t work that way anymore?”
It’s actually the opposite, so it’s fascinating. When I was at Launch we had a product called LAUNCHcast, which, again, was very Pandora-like, it was just very, very early. But it was personalized, not customized, personalized radio, where algorithms were kicking into play, looking at what Peter Kafka was playing and then recommending and playing songs that were contextually relevant to you. And it worked really well. Again, it was too early. Timing is everything.
And so if you fast-forward today, where it’s now 2019, and we’re still as an industry trying to get our heads around this idea of right content to the right user at the right time. You would think at this point it would be commonplace across every digital product, but I think people are still working through that. So I think if anything, Launch was way, way ahead of its time.
And so you’re still hearing echoes of it today in Bristol.
I am. I am.
Jimmy, thanks for coming to New York, I appreciate it.
Thanks for having me. Pleasure.
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