ESPN tries to please Wall Street instead of its viewers

Alan Truex 

ESPN, the leading sports network, is suffering declining revenues that are dragging down the stock of its parent company, Disney.  Increasingly, ESPN feels it should act more like a politically correct corporation rather than a journalism outlet.  And the journalism is suffering.

We saw this at the end of the NBA All-Star Celebrity Game, when ESPN’s Sage Steele did not quite live up to her name after Win Butler did live up to his.  The vocalist for the Canadian band Arcade Fire was MVP in Team Canada’s 74-64 victory over Team America.  But as he stood holding his gaudy trophy, his victory speech veered off the track of clichés Steele was expecting.

“The U.S. has a lot it could learn from Canada,” he said.  “Health care, taking care of people, and I think . . .”

And that’s as far as he got.  We don’t know what message was being electronically transmitted into her ears, but Steele abruptly cut him off before he could say anything else that might offend corporate America.

“We’re talking celebrity stuff, not politics,” she said.  “Congratulations on your MVP.”

And the network cut away.

From a journalistic standpoint, one might question her – or her director’s — judgment.  How promising was the “celebrity stuff” Steele preferred to explore?

At 35, Butler is aging for an athlete or, for that matter, a rocker.   But if ESPN thought the game was worth televising, it could show some respect for the Most Valuable Player of that game.

As long as he was not being more vulgar than our average presidential candidate — and he wasn’t — he deserved more than 10 seconds to plug something.  Instead of his latest album, he stated an opinion about health care.

For all the opinions Bill O’Reilly and other American TV commentators offer on Canada’s health care, we rarely hear from an actual Canadian, as easy as it is to find one.

This was a rare – and newsworthy (at least blog-worthy) occasion of reality merging with culture merging with sports.  The dozens of us who were watching NBA Countdown (OK, I exaggerate) did not expect that drama and insight could unfold.

But it didn’t get to develop.  Seems to me, ESPN dropped the ball.  There was a human interest story there, whether or not it’s what everybody wants to hear.

Win Butler offers a unique perspective.  Born in Truckee, Calif., of Mormon parents, he spent most of his childhood in Houston, where his father worked as a geologist for Halliburton.  Young Win also lived for a while in Buenos Aires, and he attended prep school in New Hampshire, at the prestigious Phillips Exeter Academy.  He was more student than athlete, but he did play on Exeter’s varsity basketball team.

He attended Canada’s most esteemed university, McGill, in Montreal, and it was there that the indie-rock band Arcade Fire was born, with Butler writing most of its music.  He has lived in Montreal ever since and intends to become a Canadian citizen.

Instead of that story, we see ESPN groveling for the lowest common denominator of viewership.  What can they put out there to fill space without being offensive or interesting?  Celebritystuff?  Perhaps Steele can get a job at TMZ.

My thinking is that if ESPN were independent of Disney, it would have the courage to let athletes express controversial opinions.  Would Sage Steele have tried to silence Muhammad Ali from making a political comment about the Vietnam War?  Or LeBron James from talking about policemen shooting black youths?

ESPN, which once hired Dennis Miller for commentary on Monday Night Football, is now running scared.  For the past two years it’s been cutting back on the talking heads, and also trimming the off-air staff (by at least 400), shrinking the budget in a response to Wall Street’s guidance.

There’s no more Grantland, the ESPN website that featured in-depth, high-quality sportswriting.  The network last fall canned Bill Simmons, founder of Grantland.

Speaking on CNBC, Jim Cramer said that despite a Star Wars boost and “a superb product line,” Disney is lagging “because of one thing:  ESPN is slowing, the revenues are falling, and it’s causing Disney to be valued at a lot less than it should be.” 

ESPN, which is owned 80% by Disney and 20% by my former employer, the Hearst Corporation — that bastion of traditional journalism — reported a net cash flow of $4.5 billion last year, a 49% rise over the previous five years.  But Cramer sees a lower number this year, and Wall Street is lowering its valuation of Disney.  

Cramer said advertising revenues are slipping along with ratings, as sports fans devote more time to surfing the Internet, less time to watching television.  

Also impacting ESPN is rising competition from the new Fox Sports 1 and a rebranded NBC Sports and CBS Sports networks.  As conferences and individual institutions (Longhorn Network, for example) take their slice of the satellite/cable package, there’s little room for ESPN to grow.

As much as ESPN shuns political issues, it faces a challenge from, of all places, the corporation-friendly Republican Party.  Sen. John McCain is sponsoring legislation that would require cable and satellite companies to offer a la carte programming instead of lumping ESPN’s many channels into one package.

McCain said, on Bloomberg TV, that the current system “is terribly wrong.”  He added:  “Frankly, the most egregious of all is ESPN.  There are many people like me who do not like to watch ESPN, yet they’re faced with the prospect of paying about $5 more in their cable bill.  They are paying for these hundred-some channels that they never watch.” 

Forbes last year evaluated ESPN at $50.8 billion, with the rest of Disney worth $87 billion.  But Cramer believes the two companies would be worth more separate than together, and he sees ESPN losing value.  To the point where some analysts on Wall Street are recommending that Disney spin off ESPN to be on its own as a sports entertainment/journalism vehicle.

CEO Bob Iger scoffed at the suggestion that Disney would divest itself of its sport empire. So it’s probably not going to happen any time soon.

But it might be better for consumers if it did.

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