Cable Operators

ESPN3 Wins Over Small Ops

7/26/2010 12:06 PM Eastern

As small operators gather
in Baltimore for the Independent
Show this week, ESPN3.com continues to add affiliates
from that constituency, whose
leadership has been vocal in decrying
the broadband service’s
pricing structure.
Repositioned in 2007 to include
more live events and rebranded
on April 4 from ESPN360.com,
ESPN3.com has recently scored
deals with National Cable Television
Cooperative members Sunflower Broadband, News Press &
Gazette, Arvig Communications Systems and the municipal provider
Frankfort Plant Board in
Frankfort, Ky., as part of distribution
push that has seen it more
than double its affiliate base over
the past year to 53 million subscribers
in the U.S., two-thirds of
the nation’s broadband homes.
Negotiations for ESPN3.com
are also an integral part of parent
The Walt Disney Co.’s negotiations
with Time Warner Cable, as
the content company’s deal with
the No. 2 cable operator is set to
expire on Sept. 2.
With usage up 112% overall and
coming off its best-ever performance
from a host of metrics with
the 2010 FIFA World Cup, ESPN3.
com is poised to present a bevvy
of college football and basketball
during the upcoming school
year, as the broadband service
continues to add live and exclusive
content, including Atlantic
Coast Conference pigskin action
as part of ESPN’s multiyear, $1.9
billion deal with the conference.
ESPN executive vice president
of content John Skipper, during
the July 8 conference call announcing
the new comprehensive
TV and advanced platform rights
package with the ACC, said he
anticipates that a deal will be in
place before the start of the 2010
football season. Time Warner Cable
has a dominant presence in
North Carolina and is also well-positioned
in South Carolina.
David Preschlack, executive
vice president, affiliate sales and
marketing, for Disney and ESPN
Media Networks, said the company
is engaged in “ongoing conversations”
with Time Warner
Cable and that ESPN3 is “an integral
part of the discussions extending
on any number of fronts.
Obviously, we want to get a deal
done. We have a 30-year track record
with Time Warner Cable.”
Asked if ESPN3 fare, featuring
some 3,500 events in 2010, could
wind up being part of a “TV Everywhere”
element within a new
comprehensive contract package,
Preschlack said it was “too
early to tell.” He emphasized the
service’s importance to the company
by invoking ESPN’s “best
available screen” mantra from
its upfront presentation in May.
“Getting product to whatever
platforms sports fans demand is
a massive focus for us,” he said.
As to smaller ISPs, Preschlack
said ESPN3 is on the “doorstep” of
a deal with another NCTC member
and continues to talk with
other co-op companies, as well
as the organization itself, about
a deal for the service. A spokesman
for NCTC, whose overall
master deal with the sports programmer
expires in a couple of
years, confirms that discussions
have occurred with ESPN about
its broadband service.
With ESPN’s affiliate team negotiating
directly with co-op
members, Preschlack said some
NCTC companies were part of
the broadband service’s initial
lineup and range from those as
small as Minerva Valley, with 241
subscribers, to Windstream, with
1.1 million. He said that when
all NCTC members broadband
subs are accounted for, the co-op
ranks behind Comcast, AT&T, Verizon
Communications and Cox
Communications as ESPN3.com’s
fifth-largest affiliate.
“It’s been an incredible effort,”
said Preschlack, who said
the broadband service has deals
with some individual 100 NCTC
members.
Those ISPs aside, ESPN3.com also has deals with Charter
Communications, Mediacom
Communications, Insight Communications,
Suddenlink Communications
and RCN. Coupled
with another almost 24.5 million
students (21 million) and military
personnel who receive the product
free via .edu and .mil networks,
ESPN3.com now stands
as the sports programmer’s third-largest
service, behind ESPN and
ESPN2 and ahead of college sports
network ESPNU, according
to Preschlack.
ESPN3.com’s still growing roster
is at odds with the stance of
American Cable Association CEO
Matt Polka, who at last year’s Independent
Show railed against
then ESPN360.com and its model,
under which affiliates must pay a per-subscriber license fee for the
service, even for subscribers who
never access it.
Last week, Polka again expressed
ACA’s opposition to
the structure and the organization’s
wont to contain broadband
costs.
“The Walt Disney Co.’s refusal
to have a direct financial relationship
with just those consumers
that actually want to watch
ESPN3 on the Internet is a scheme
to force millions of people to pay
for content they don’t want,” he
said. “Blocking big media companies
like Disney from imposing
a costly and inefficient cable programming
business model on all
broadband subscribers is clearly an important matter for the FCC to take on.”
Polka continued by saying that if “Disney’s anticonsumer
act ions are not stopped, the cost of a
monthly broadband subscription will rise for everyone,
people on the low end of the income scale
will be less able to afford broadband at all, and ACA
members and other network owners will have less
capital to extend broadband technology to the 14
million to 24 million Americans who the FCC says
have only a dialup
connection to
the ’Net.”
Preschlack countered
by noting that
[NCTC and ACA]
“members have
decided the other
way in droves. I
can only guess that
[Polka] is trying to
negotiate a better
price.”

Sources peg the
monthly license
fee for ESPN3.com at between
7 cents and
10 cents per subscriber.
Preschlack
and other ESPN officials would not comment about pricing.
In addition to college football, basketball and other
collegiate sports, ESPN3.com this summer and fall will offer the U.S. Open tennis championships, FIBA World Championships, the Little League World Series, plus a host
of soccer properties, including action from the Portuguese
league; Italy’s Serie A and Copa Italia; the German
Bundesliga; and Spain’s La Liga and Copa del Rey.

At the recently concluded 2010 FIFA World Cup in
South Africa, ESPN3.com kicked around some impressive
numbers: 54 live matches were viewed by 7.4 million
unique viewers, who generated 942 million minutes of
viewing or more than two hours per unique. The 54 live
matches that were available were viewed by an average
of 114,000 persons per minute, with the live Spain-Germany
semifinal watched by 355,000 people per minute,
ESPN3.com’s largest average audience ever.

Vital statistics on ESPN3.com:

Launched: 2001 (as ESPN Broadband)
Total subscribers: 53 million
NCTC affiliate subscribers: 4.2 million
Recent affiliates: News Press & Gazette, Sunflower Broadband, Frankfort (Ky.) Plant Board
Usage: Up 112% in 2010 from 2009
SOURCE: ESPN

September