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Shapiro: ESPN's Pivotal Development Player

8/12/2005 8:00 PM Eastern

ESPN is cable's leader in terms of holding the rights to marquee sports programming. As executive vice president of programming and production, Mark Shapiro is not only a key executive in negotiating those rights deals, but he also oversees the ESPN Original Entertainment division, which produces reality, scripted and movie fare. Shapiro recently sat down with Multichannel News news editor Mike Reynolds and programming editor R. Thomas Umstead to discuss myriad topics, including the sports giant's scorecards with original program development, Major League Baseball, the National Football League and NASCAR. [At press time, published reports indicated that Shapiro might leave ESPN for a job with Washington Redskins owner Dan Snyder, or with NBC News. Shapiro did not return phone calls and a spokesman said ESPN does not comment about personnel matters.]

MCN: ESPN's Original Entertainment division is nearly five years old. Has it lived up to your expectations?

Mark Shapiro: The mission was to broaden and stretch the brand. From the movies to the [scripted] dramas to some of the news and information and pop culture shows, we're here to successfully report we've done that, and we're doing more of it.

But we're going to need to continue to condition our audience to expect it and anticipate it and embrace it. They've done that but, you know, it's still only 6% of our schedule.

MCN: So you want EOE programming to represent as much as 10% of the schedule?

MS: I think 10% is probably the ceiling. If it's going to truly supplement our core menu of games and news and information programs, it's got to be at a meaningful degree. And 10% of our schedule would probably hit that mark.

MCN: That's a combination of ESPN and ESPN2, because a lot of what you're doing now is going toward ESPN2, right?

MS: Yes. We're trying to develop a signature identity for ESPN2. First and foremost, you'll always look at ESPN and ESPN2 for big events. Then at ESPN, you'll look for the news, the news of the day — the analysis, the evaluation, the opinion and the definition of any and all headlines. But for ESPN2, it's got to be beyond the news. We think that entertainment programming, original programming, can become the secondary vein of the network.

So that's why our next movie, Four Minutes, will premiere there. That's why [talk show Quite Frankly With Stephen A. Smith] launched there as a signature program. That's why ESPN Hollywood will launch there [Aug.15] and that's why a late-night show is on the horizon.

MCN: Will you develop more scripted shows?

MS: We have four scripted dramas in development, and plan to launch one of them as early as next spring. We do foresee a time when we might have two dramas on the air at the same time.

MCN: What are you looking at?

MS: We have a boxing drama that is being developed and written by John Isendrat that would be complementary to [the off NBC network reality series] The Contender. We're in discussions now.

MCN: New episodes of The Contender?

MS: A new, second season. It's still being negotiated, but that's our intention. Mark Burnett, of course, would executive-produce. We think we can put together a killer night with The Contender and a boxing drama back to back.

One in development is based on the book, The Bronx is Burning. The other would be something along the motor sports line, and that's all I'm going to say on that.

We still have a decision to make on Tilt and we have another idea that has been brought to us, based on the inside world of the poker business.

MCN: So Tilt hasn't tilted yet?

MS: No. Tilt will never tilt, because Tilt was launched as a limited-run series. But the feedback was good; it averaged a 1 rating and the finale did a terrific number. Thursday nights are what hurt it. We have to decide if there's another arc to bring it back. I don't believe there is; I think we should kind of keep it where it was.

MCN: Are the other series also limited-run?

MS: The final three are so far away. I mean, I wouldn't call them anything at this point. The boxing series is a serial episodic that would be brought back for year two and three depending on its success.

But proprietary programming is the key to our future programming. It can't just be about leasing sports properties and news programs. We need it to survive and we need it to prosper. We can't just be solely dependent on breaking news and game scores and highlights. That has to be what we're known for, but we need something else to support that.

We need to stretch the brand in the same way that Starbucks needs CDs to offset the coffee. In the same way that Dunkin' Donuts has made coffee the No. 1 item on their menu before even the donuts. You have to stretch your brand these days if you want to survive and prosper.

MCN: Does that take away from funds that you might need for acquisitions?

MS: No, absolutely not. But we're not naïve enough to think we can own everything. There's a lot of competition out there. Many of these sports leagues think there's a waterfall of funds, and there isn't. Sports viewing is up, but ratings for specific sports have been dropping over the past few years.

We always take the position that we have to get significant value on our investment. If you expect significant rights fees, you'd better to be able to deliver significant rating returns, and many of the properties today are challenged.

MCN: You were quoted recently saying that in order for the MLB to get a rights fee increase, it would need to give you exclusivity beyond just Sunday nights.

MS: Yes. The NFL gets a premium because Monday Night Football is the only game in town. If Major League Baseball is looking for an increase on its rights fees, how is our package being enhanced? Ratings for baseball have stayed relatively flat.

MCN: Would you walk away, if it's not the right package?

MS: We don't even look at the proposition because America's pastime has to be with, I think, America's sports network. Baseball will always be with us. It's a matter of degree and depth.

MCN: Your contracts are up after this season?

MS: Sunday night baseball and Wednesday night are up, the others [Monday night and Wednesday afternoon through ABC's acquisition of Fox Family] are on. That's what most people don't realize: We're not done with baseball at the end of this year. We have another year.

MCN: Are you also talking to MLB about the World Cup of Baseball as part of a new agreement?

MS: It may be a separate discussion depending on the timeline of these deals. But we're interested in the World Baseball Classic.

MCN: Now that the National Hockey League will have a season this year, are you negotiating? Are you still adamant about not paying a rights fee? [The interview was conducted prior to reports last week that Outdoor Life Network was nearing a deal to acquire NHL rights.]

MS: I want to be clear on this. We were never adamant about not paying a rights fee. We were adamant in not paying $60 million a year. As long as the value's there and there's exclusivity in the postseason, we believe a rights fee is warranted — but at half the price. That's kind of where we stand.

We've had I think very encouraging discussions as of late. But there are plenty of networks out there that need content and would be plenty happy to be a player for content for one of the four majors — five majors: you have to include NASCAR in that.

MCN: How important is it for you to reacquire NASCAR when those rights come up?

MS: When the time is right, we'll be there ready to do our part in showing them our zest and passion for picking up where we left off.

MCN: Was it a mistake to let it go?

MS: Absolutely not. I find it pretty ironic that since we lost NASCAR, ESPN went on a tear of a ratings run. So the brand grew and strengthened and our ratings increased significantly once we lost NASCAR. Most people said we couldn't live without it. What we showed is that no one sport is going to make a do-or-die situation for ESPN.

Having said that, we believe we'd be stronger with NASCAR. But the world didn't come to an end when we lost it.

MCN: Does ESPN's zest and passion for NASCAR include launching a dedicated channel.

MS: We're not looking to launch any channels right now.

MCN: Your competitors have said that ESPN overpaid for Monday Night Football

MS: I've read all the reports and all the financial analysts say this will be a profitable deal for us. The bottom line is Monday Night Football was a monster deal for us. History will judge the Monday Night Football acquisition as being a pivotal move at a pivotal time. It was time that the best property in sports moved to the biggest brand in sports.

And it's not just a television deal. It's about the fantasy [sports] deal and the wireless highlights and the eight-year agreement, which is two years longer than anybody else. It's about all the footage and highlights that we'll have to blanket across all of our networks — ESPN HD, ESPN Desportes. The $1.1 billion [annual rights fee] doesn't just represent 21 games on Monday night. It represents fuel for all of our emerging platforms and existing platforms.

MCN: Will Monday ratings be as high as you get on Sunday nights?

MS: We'll do better numbers than Sunday Night Football, but we're not going to beat over-the-air television. They have a 20 million [viewer] head start over us. But make no doubt — Monday Night Football will be the biggest sporting event on television, bar none, week in and week out. You don't need to rate the highest to be the biggest event on television. Perception is reality.

MCN: Will you get that quality of schedule Monday Night Football package has received?

MS: We've been assured a quality of schedule that is consistent with what Monday Night Football has enjoyed in the past. That's our contractual right.

MCN: Do you have any interest in the NFL Thursday-Saturday package?

MS: We're absolutely interested, but in a deal that's economically feasible and reasonable for us.

MCN: Do you think that Comcast is going to emerge as a national player, or will Rupert Murdoch try to use the new NFL package to make a national network for News Corp.?

MS: It's tough to forecast these things. But given ESPN's position in the industry and its place in the sports fan's mind, you have to plan as if a sports network is launching tomorrow to take away your business.

You have to plan as if Fox News Channel's right around the corner and constantly be looking in the rear-view mirror. But realistically and feasibly, can they launch a network that's going to displace ESPN in the next decade? It can be done I guess, if you're a competitor and you want to believe that. But that's a tough putt.

You can buy properties, but that doesn't mean you can produce a great television program. CSTV hasn't been able to acquire any meaningful properties. Mountain West will live to regret the day it did a deal with CSTV. But the first step is acquiring the property. The second is producing. They've produced one Division 1 football game in two years. So let's call it what it is. People don't just come to ESPN because we acquire great properties. They come to ESPN because of the quality of our telecasts.

MCN: Beyond X Games and some of the other programming, are you looking to fortify your video-on-demand product maybe with your EOE original programming?

MS: VOD's an interesting road because I'm not sure how much of it is really must-see television: It's for the most part repurposed. If they can do original programming that airs first on VOD so it's sort of a network in a network, now you've got my attention. The experiment we're doing with Comcast for the X Games is exclusive programming. The only place you can see that event is if you have Comcast VOD — now that's a stunt. And by the way, that brings a million dollars in local ad sales to support it. That's a winning strategy for us and our partner.

But for me, if I miss any of Entourage, I'm going to wait and buy the DVD set at the end of the year. HBO still gets me one way or the other, but VOD's just not a first-choice destination in my household. TiVo [Inc.'s digital video recorder] is. So I'm not sure it's the killer application that everybody thought it was going to be, whereas, I think people really underestimated DVRs. Either way, as long as the economic investment is there from our MSO partners, we'll be there to support their efforts.

MCN: Sticking with various technological platforms, ESPN last April moved into the pay-per-view arena with a boxing show …

MS: It was unbelievable; 150,000 [PPV buys] without any real headliners on the card. We want to be more aggressive in this business and we're tentatively planning on another fight card in November.

There's an opportunity to maybe do one or two PPV events with The Contender fighters somewhere on the card. The Contender deal isn't just about television programming; it's about international formats, DVD, pay-per-view events, merchandising, a potential new league.

MCN: Are you guys making money on your golf content? There was a report that ABC wants to bail.

MS: ABC Sports is not looking to bail on the [Professional Golfers' Association] tour. That was an erroneous report. However, the economic terms are going to have to change because the PGA tour isn't pulling the same ratings today that it did when Tiger Woods first came on the scene. Our rights fees reflected Tiger Woods emerging on the scene. The rights fees now have to come more in line with what the current status is of the [tour].

MCN: What about the future of some reality programming like Teammates and ESPN Bowling Night?

MS:Bowling didn't work for us. The first episode did well for us, and if it were a half-hour show it might have worked. There wasn't enough reason to watch. Teammates was a good story for us. We're making that a daily show [with higher production values] in the fall — another signature programming for ESPN2.

MCN: You also have Dick Butkus coming in to coach some team in a new show.

MS: Yes, Bound for Glory. The cameras are working 24/7 as he plods, organizes, strategizes and tries out kids for a local high school team.

You have to take risks. ESPN takes more risks than our competitors. It's about gut and instinct as much as it's about scientific data. A focus group would have stopped us from doing movies. A focus group would have stopped us from doing scripted dramas. It's about risk-taking, it's about getting out there first.

September