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ESPN

Name

Institution
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ESPN ownership

Entertainment and Sports Programming Network (ESPN) is an American basic cable

sports channel jointly owned by the Walt Disney with 80% shares and 20% by the Hearst

Communications. It was founded in 1979 by Bill Rasmussen alongside his son Scott Rasmussen

and Ed Egan. ESPN has its main studio located in Bristol, Connecticut. It also has offices in

Seattle, New York City, Miami, Charlotte and Los Angeles. The current chairman of the

company is James Pitaro who has held the position since March, 2018 after the resignation of the

former chairman, John Skipper in December, 2017. Statistics indicate that the channel was

available to about 93.2% of the households in USA using pay television. The company has a

total of eight channels and broadcasts to more than 200 countries around the world. Its regional

offices are located in Australia, Brazil, Latin America and UK and it owns 20% of The Sports

Network and five sister networks in Canada (Maclean, 2017).

ESPN business model

Apart from advertising, ESPN charges a fee of $7 per month for each of their subscriber.

With over 98 million subscribers, the company gets profits of up to $4.3 billion a year. At its

inception, the company had adopted the conventional broadcast model where they could pay its

affiliate stations to show their programs and earn revenue through advertisements. This model

was not the best one to be adopted as the company was making constant losses. After one year in

operation, the company had made a $30 million loss which pointed a red flag. Werner, who later

become the president of the company then suggested the model which is currently used that the

company stops paying the affiliates but instead start charging for subscriptions which will offer

an alternative revenue stream for the company thus generating more income. This model

generated high profits within the initial years of operation. As demand increased, the charge cost
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increased from 70 cents in the early 190s to $3.6 in the late 1990s. The current subscription

charge is $7 dollars per customer per month.

Mass convergence effects

As the years go by, there has been growing trends in the media industry including

convergence and digital technology. Convergence involves combining all forms of media in the

digital form. Some people have argued that it is a key development in the industry as it offers

much content at lesser cost. Others however claim that it reduces the diversity of media coverage

and only puts focus on profits. Though it seems to be an inevitable transformation in the

industry, some companies have raised concern that it is a technologically driven process to

influence how outcomes occur in the industry whether positive or negative (Turner, 2016). For

our case study, we analyze how digital technology and mass convergence has created new

problems to the business model of ESPN Company.

Loss in subscribers

With the rise in usage of digital technology, people are preferring to use more the social

platforms rather than depending on the channels provided. It is cheaper to view content when

online than it is when you have subscribed on the Television. ESPN has lost more and more

subscribers as years go by since the introduction of convergence. In October 2015, it lost

621,000 subscribers, the largest number it has ever lost in a single month. The drop is also

contributed about by the decrease in individuals who view sport content as convergence has

brought about a wide variety of content to the consumer.

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Competition

As discussed above, convergence brings about a wide variety of content to the consumer.

Despite the fact that frequency of watching traditional TV is reducing across households in the

country, people are taking in more media content than ever before. Most of them have shifted

their subscription from the cable from to the SVOD services for instance; Hulu, Netflix and

Amazon. This has led to a decline in those using the ESPN cable service drastically.

Dealing with media convergence

Despite of it being a leading sports channel in the USA it cannot undergo some digital

transformations so as to honor the contracts it has made before. ESPN however has developed

strategies to deal with the challenges at the same time maintain its followers through special

features they develop inside the company. Some are discussed as below.

Virtual play-by-play

This technology allows the commentators of the ESPN to have a one on one interaction

with realistic looking three dimensional players about forthcoming matches on a broadcast

(Meikle et al, 2012). This will mostly attract the young audience thus boosting and keeping their

fans up to date with the growing technology.

360 degree communications

This is a brand the company developed to promote its new strategy in the industry which

ensures that every part of the company makes sure stories are brought about that revolve

everything from internal to television networks, to magazines then mobile offerings. Putting

communication websites, internal, media specific and external will give ESPN the unique ability
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to communicate both in and out of the company. This is in effort to maintain a vibrant

communication so as to retain as many subscribers as possible.

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References

Maclean, M. (2017). ESPN: the making of a sports media empire. Sport in History, 37(3), 388–390.

doi: 10.1080/17460263.2017.1315023

Meikle, G., & Young, S. (2012). Media convergence: networked digital media in everyday life.

Basingstoke, Hampshire: Palgrave Macmillan.

Turner, B. A. (2016). The ESPN Effect: Exploring the Worldwide Leader in Sports. International

Journal of Sport Communication, 9(3), 389–391. doi: 10.1123/ijsc.2016-0061