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ESPN Radio pursues strategies to build its audience and revenue on FM

ESPN Radio pursues strategies to build its audience and revenue on FM

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Published by Jeff Gilbert
A final paper on ESPN Radio written for The Business of Sports Media Class in the Indiana University Sports Journalism masters program.
A final paper on ESPN Radio written for The Business of Sports Media Class in the Indiana University Sports Journalism masters program.

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Published by: Jeff Gilbert on Jul 18, 2011
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07/18/2011

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1Jeff GilbertESPN final paperBusiness of sports mediaProf. Tim FranklinDec. 15, 2010
ESPN Radio pursues strategies to build its audience and revenue on FM
By Jeff GilbertAbout every seven days the station locator map on ESPNRadio.com goes out of date. Becauseevery seven days somewhere in the United States, an ESPN Radio affiliate moves from the AM band toFM.There isn’t a fire sale on FM frequencies. Instead, the FM band has become more desirable thanAM for talk radio for measurable reasons that add up to FM placement becoming a more profitableenterprise for ESPN and its affiliates.Since 1992, ESPN has grown its multimedia brand with a radio network that has ballooned tomore than 700 affiliates, including about 370 that are full-time ESPN Radio stations. ESPN’s FM strategyis in place because of the potential to reach much larger audiences, including the desirable young maledemographic. According to a Sept. 27 report on mediaweek.com, ESPN has already converted nearlyone-third of its affiliates to FM. ESPN has also gotten into the local sports news Web site business in fivemajor markets, and four of the sites are partnered with ESPN owned and operated stations. ESPN hasbeen a big player in the radio business for 18 years, and these two new strategies make it clear that ithasn’t stopped looking for ways to expand its brand.Katy Bachman, who covers the radio industry as a senior editor for Mediaweek andmediaweek.com, wrote in an e-mail that she knows of no one in the media business who says ESPN’sgrowth strategies are ever misguided.“They are often held up as a prime example of a highly effective brand with a highly effectivestrategy,” she wrote.
 
2According to a presentation obtained from ESPN about the reach of its radio brand, 12 percentof all radio listeners and 61 percent of sports radio listeners tune in weekly to ESPN Radio based on 2009findings by radio ratings agency Arbitron. That percentage equates to 20 million listeners a week.Further, ESPN says its heavy radio users spend just over 35 hours a week with ESPN media, and almostnine of those hours are spent with radio.“Second to TV, it’s where our primary fan base spends its most time,” Traug Keller, an ESPNsenior vice president who oversees ESPN Radio, said in a phone interview. “That’s no small piece. It’s anoperating income contributor to the company.”Why ESPN got into radio and why it wants to expand its reach to more sports fans who like to beentertained by sports chatter, is no mystery. Ask any ESPN executive and you get the same answer. Readthe financial reports that parent-company Disney files with the Securities and Exchange Commission andit’s spelled out. Even Bob Iger, the president and chief executive officer of Disney, knows the mantra. Herecited it during a conference call on Nov. 11 that was timed to the release of Disney’s quarterlyearnings report.In the transcript posted to the SEC’s EDGAR Web site that posts company filings, Iger said, “ESPNhas a simple and powerful mission: to serve sports fans wherever sports are watched, listened to,discussed, debated, read about or played.”Keller recited the same statement almost verbatim when asked how radio fit into the company’sstrategy.“That mission drives our company,” Keller added. “And from that it’s not a hard leap to see whyradio wouldn’t be an important role there.”ESPN won’t divulge its percentage of revenue from radio, but with such an aggressive growthstrategy and Keller’s enthusiasm for the medium it’s not hard to understand why radio is getting thisattention.
 
3“In this interactive age, sports talk radio was the first interactive medium,” Keller said. “Sportstalk radio has been connecting from the get-go, and now using the new technologies continues to do so.“Radio’s prominence on this campus [at ESPN headquarters in Bristol, Conn.] has risendramatically in the last few years. It has good business success and great reach and just great numbersto back it up in how many fans are consuming it.”
Following the mission
The way longtime ESPN management consultant Anthony F. Smith tells the story in “ESPN TheCompany,” the idea for the multimedia role that radio could play began in 1991. Corporate partner ABCRadio asked ESPN to provide 30-second spots that could be used during breaks in its regularprogramming. That request triggered some innovative brain cells in Bristol to realize it was time toventure beyond TV in pursuit of the company’s mission.Jim Allegro, who worked on the finance side, approached then-ESPN President Steve Bornsteinwith the idea of starting a national sports radio network. No one had previously been successful withthis idea, so the right man for the job as it turned out was John Walsh, the innovator behind an earlierrevamping of the cable TV icon “SportsCenter” that retains his signature today.“Steve pulled me in an office in New York one afternoon,” Walsh recalled in a recent interviewhe gave to Indiana University’s National Sports Journalism Center. “‘We’re starting this radio and allthese guys are going on the air and we’re not paying them an extra dime. They’re all going to do it. It’sgoing to be part of their assignment.’”With the mission in mind to serve fans, the project began, and it didn’t matter to Walsh whenhe was told he had two months to get the network on the air. That’s a short time for most companies,but for ESPN it seemed about right. Smith’s book details other instances of fast-paced change at ESPNand explains that it’s simply part of the can-do, risk-taking culture that built the company.

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