Welcome back to The Varsity, our thrice-weekly private email documenting the ins and outs of the sports business. I’ll be back in New York this week for the Sports Business Awards and Sports Emmys, which are honoring former Fox Sports head David Hill with lifetime achievement awards on back-to-back nights.
Bing Bong: After delivering the commencement speech at St. John’s Law School yesterday, ESPN’s Jimmy Pitaro gave out two Knicks tickets to a randomly chosen graduating student. Check out the video here, starting at the 52:30 point.
🚨 Pod alert: My Puck partner Bill Cohan will rejoin the Varsity pod this week to walk us through the state of the sports media market from a finance perspective. Also, make sure you listen to yesterday’s edition with Fox Sports C.E.O. and executive producer Eric Shanks. We talked a lot about the business of sports media, of course, but I was most interested in hearing about the small, weekly newspaper he bought that’s turning a profit.
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- A Disney resignation: I received countless texts over the weekend from sports media fans looking for more info on my Friday night report that Disney’s top distribution executive, Justin Connolly, had resigned—to the surprise of his colleagues and with his destination shrouded in enigma. Here’s what we know: Connolly, who spent the past 25 years with Disney and ESPN and was the company’s president of platform distribution, reported to Dana Walden, Alan Bergman, and Pitaro. He announced his resignation in a note to select staff, but did not say much else beyond the miss you all I love this place pablum. YouTube TV, the virtual M.V.P.D. that lost Lori Conkling to Netflix back in January, has been mentioned as a likely landing spot. (Of note: Disney’s affiliate deal with YouTube TV is up at some point this fall. Its deal with Comcast also needs to be renegotiated this year.)Meanwhile, Connolly’s exit doesn’t look like it will be as smooth as he’d hoped. A Disney insider told me they were surprised by his abrupt decision to exit, since he re-upped a multiyear, fixed-term contract earlier this year. Plus, Disney hasn’t agreed to release him—to YouTube TV, or anywhere else. After all, Connolly was a finalist to replace John Skipper as the head of ESPN in 2018—a job that went to Pitaro. He was also in the mix to run the NBC Sports Group a couple of years ago, before Disney lured him back to the parentco side of the business with an attractive deal.
Either way, this seems sudden and fraught. Connolly, who cut his teeth in ESPN’s affiliate sales and distribution department, was front and center at ESPN’s presser last Tuesday announcing the name and pricing plans for the company’s forthcoming D.T.C. service, née Flagship, now known simply as… ESPN.
- Back in the Reali world: Tony Reali kicked off the final week of Around the Horn’s 23-year run with an in-studio appearance on The Dan Patrick Show. Reali, a.k.a. Stat Boy, acknowledged that he first learned his show was on thin ice with the suits in Bristol from a New York Post report—which, naturally, ESPN executives brushed off. “That’s when I heard, We don’t know where that came from,” Reali said. “And we all know what that means.”Reali spent the next several months suggesting potential changes that he believed could save the show—getting rid of the mute button, adding ex-athletes to the panel, etcetera. Ultimately, ESPN pulled the plug. ATH will be replaced by a 30-minute SportsCenter during the summer, but a permanent replacement—that would presumably start in the fall—is still T.B.D. “The bones of the show is journalism. And when this one goes away, there ain’t any more,” Reali told Patrick “I love Tony [Kornheiser] and Mike [Wilbon]. [But] they’re not writing in The Washington Post on deadline tomorrow.”
This week, many of the show’s favorites will make a final appearance, including Woody Paige, Tim Cowlishaw, Bob Ryan, Kevin Blackistone, Jackie MacMullan, Mina Kimes, Pablo Torre, Courtney Cronin, and Clinton Yates, among others.
- ESPN+’s future: ESPN+ isn’t going to dark when ESPN, the streaming service, eventually makes its big public debut. The old app will stick around, at least for a bit, to honor its UFC deal and obligations to some college conferences, Rita Ferro, Disney’s president of global advertising, told Adweek. Disney execs have said that part of the soon-to-launch app’s growth will come from trying to upgrade ESPN+ subscribers to the Disney+/Hulu/ESPN bundle. “[ESPN+] will continue to exist because there is a marketplace for it—ESPN+ has over 30,000 hours of live events,” she said. “But we are also prioritizing the triple bundle that includes ESPN, Hulu, and Disney+, with or without ads for consumers. We’re going to be very ambitious in terms of how we want to go to market with that product, with a promotional price at launch that will then ultimately evolve to the final price.”
- TV Upfront Awards: Make sure you read my Puck partner Matt Belloni’s review of last week’s TV upfronts, which includes honors for Roger Goodell (the Belle of the Balls award), Jerry Jones (the Okay, Grandpa, Let’s Get You to Bed award), and Michael Jordan (the Biggest Flex award). Matt bestowed the Buzziest Buzzword award on “non-cannibalization,” after both ESPN and Fox unveiled plans around their soon-to-launch direct-to-consumer services.Here’s Matt… “I had breakfast with one analyst who noted the long-awaited ESPN service is not expected to generate more than a couple million new subscribers in the first few years, and most of them will likely be bundlers and cord-nevers. Which is consistent with the current thinking in the TV business,” he wrote. “People still paying for the cable bundle at this point are unlikely to be nudged out by the availability of particular programming on streaming. It’s a different audience, and the challenge is to capture each demo where they are while gently nudging them toward the streamers and their direct relationship with the customer.”
- Main Street people: Diamond Sports Group emerged from bankruptcy five months ago, changed its name to Main Street Sports, solidified its rights deals with dozens of professional teams, and has now added two board members who have a ton of media experience: Rich Battista, the former Time Inc. C.E.O. and current executive chairman of Adweek, and MGM C.O.O. Chris Brearton. They’re coming aboard as Main Street tries to grow its streaming business amid the cable implosion that’s costing distributors millions of customers every quarter.Batista and Brearton join Main Street C.E.O. David Preschlack, producer Ryan Cunningham, former NFL C.O.O. Maryann Turcke, and former NBA and NFL executive Bob Whitsitt on Main Street’s board. Former Fox Sports executive Randy Freer is no longer on the board, which still has a remaining vacancy. Now’s your chance, Marchand!
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As its parentco finally commits to streaming, I had a candid chat with Fox Sports C.E.O. Eric Shanks to discuss the network’s bundled past, its sports and news future, and why the Indy 500 hits different for a Hoosier.
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When Fox agreed to sell the bulk of its entertainment assets to Disney, in 2017, the company essentially used the transaction to articulate its own vision for the future of media. At the time, Fox executives viewed streaming as a haven for general entertainment programming. So after the deal closed, they doubled down on live programming to feed their linear channels and preserve the integrity of the company’s cable bundle offering. At the time, they were generally derided for their conservative and analog approach. But they’d be laughing all the way to the bank as Paramount and Comcast subsequently lost billions of dollars building out their own direct-to-consumer services.
Now, of course, Fox has announced a slight pivot and embrace of the direct-to-consumer approach. During last week’s upfronts, Lachlan Murdoch announced the forthcoming launch of Fox One. Over the weekend, Fox Sports C.E.O. Eric Shanks came on the Varsity podcast and discussed the company’s strategy. What follows is a transcript of our conversation, lightly
edited for clarity.
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John Ourand: Apart from Tubi, Fox has taken it slow when it comes to building out a paid direct-to-consumer service like Peacock or Paramount+. The company recently announced the coming launch of Fox One. Has your streaming strategy changed?
Eric Shanks: The streaming wars started out about entertainment and hit shows and movies being on demand. Linear television was the place for live events. Because Rupert and Lachlan Murdoch sold off pretty much all the on-demand assets to Disney—the TV studio, movie studio, a lot of the entertainment cable channels—that left us as a leading news and sports media company, and that fit really well with the bundle. It didn’t seem like it made a ton of sense with our assets to do anything but support the bundle, and we love the relationship with distributors and stations.
It wasn’t an anti-streaming stance. We were supporting YouTube TV and Hulu, as far as reaching those streaming customers. But if you really think about the sports fans, they need a bundle because no one sports network or media company has everything. Every à la carte product that you put out, especially five years ago, created a lot of confusion and angst among sports fans.
What changed?
We wish that consumers would still just be able to get everything in one place. That’s fan-friendly. But we’re at the point now where there’s enough cord-cutters and cord-nevers that, after probably being the lead supporter of the bundle for a while, it really is time for innovation. You’re seeing the traditional distributors innovate around packages and bundles that look more like live bundles, which we like, because news and sports are in those live bundles. Launching Fox One with all the Fox channels gives us a lot of flexibility for the future, whether it’s selling Fox One as a stand-alone, or as a part of the bundles with other streaming services.
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Your idea is that Fox One is not going to cannibalize the traditional bundle subscriber?
We are very focused with Fox One being additive to the system. We are going to market Fox One in a very targeted way to people who are not in a traditional bundle, or who have never been in a traditional bundle.
You spent last week in New York for the upfront selling season. How did that go? What was the tenor?
We have a very specific offering, which is essentially live news and sports, entertainment on the Fox network, and Tubi. And those conversations go well, especially on the sports side. The NFL schedule came out, and it’s a great schedule for us that I’m super excited about. We have the World Cup. We’ve added new big events, like the Indianapolis 500. And then the special events that we’ve been able to acquire, like the new doubleheader in the NFL. We have a really good story to tell.
So I would say our conversations have gone very well, mainly because we have well-defined and growing assets for our partners on the advertising side.
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My favorite storyline from this year’s Indianapolis 500 is that you grew up in a small Indiana town and used to attend the race every year. You’ve done Super Bowls, World Series, and World Cups, but this is Fox’s first Indy 500. Does this feel different?
It only feels different because I don’t want to let anybody down. I grew up 45 minutes from here. It’s a time every year when the spotlight is on this little part of the country, and everybody here takes great pride in it. So I don’t want to screw it up. I don’t think there’s any other sport that we do here at Fox where I have memories from 40 years ago. Our seats were in front of where Danny Sullivan did the spin-and-win 40 years ago. I was there. Those memories are great, and add to being able to help the production team get really excited about producing this race.
You’re five races into your IndyCar deal. How have you Fox-ified those telecasts?
It always starts with the simple things, like the people that you’re choosing to watch the race with. We brought over Will Buxton to pair with James Hinchcliffe and Townsend Bell. The chemistry that they’ve created in the booth—they were on the air for six hours Thursday during practice from the track, just having fun and vamping. They can tell stories and go places around the track and talk to drivers and owners.
We’ve also invested in some technology that helps us tell the story better. We’ve got new graphics around the in-car. We have more in-car cameras than they’ve probably ever had—four or five cameras on each. We have cameras that literally sit next to the driver’s eye in the visor. We have more aerial coverage with drones. Then it comes down to storytellers, and we’re bringing in Tom Rinaldi for the 500 to play that Jack Whitaker role from the 1980s. For this race, we’re going to bring out a ton of Fox and Fox Sports stars, on top of all the other celebrities that are going to be here. Derek Jeter and Alex Rodriguez will wave the green flag.
How successful have you been in establishing a connection between IndyCar and NASCAR?
I don’t think we’ve got it figured out yet. There’s plenty of crossovers, obviously. Penske races in both series. Fox broadcasts both series. You’ve got Hendrick and Kyle Larson doing the double this week. We really need to continue to connect those dots with lead-ins and lead-outs to each other, feeding audiences and driving them back and forth. We’re trying to avoid having to make people choose between one or the other.
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On the evolution of college A.D.s: “I view the moment when Syracuse hired ESPN’s John Wildhack in 2016 as the start of the trend when non-athletic department personnel were being hired as A.D.s.” —A former ESPNer
On streaming productions: “Perhaps Marchand served up one too many crisp sancerres before you waxed poetic on the streamers’ reliance on broadcast networks to produce their coverage. Prime Video will be entering its third Thursday Night Football season with Mark Teitelman as lead producer of game coverage. Further, when NBA coverage tips off in October, all production will be handled in-house by Prime Video.” —A Varsity Inner Circle subscriber
On Jessica Berman’s Down to the J.V. nod: “I hope Jessica gets promoted back to the Varsity, given that the NWSL ruled that future games will be abandoned if an injured player needs life-saving measures.” —A sports business executive
On Fox’s Indy 500 telecast: “F1’s Will Buxton will be on Fox’s Indy telecast? That’s interesting. I wonder if he knows more about IndyCar than Danica knows about F1.” —A D.C. lawyer
On Shanks’ podcast appearance: “Who gives an eff about sports rights and streaming strategy? The last fivw minutes of your pod, when Shanks talks about his ownership of the Ojai Valley News and Trackside Lodge, were the best!” —A Varsity subscriber
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Finally, a media podcast about what’s actually happening in the media—not the oversanitized, legal-and-standards-approved version you read online. Join Dylan Byers, Puck’s veteran media reporter, as he sits down with TV personalities, moguls, pundits, and industry executives for raw, honest, sometimes salacious conversations about the business of media and its biggest egos. New episodes publish every Tuesday and Friday.
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An essential, insider-friendly Hollywood tip sheet from Matthew Belloni, who spent 14 years in the trenches at The Hollywood Reporter and five before that practicing entertainment law. What I’m Hearing also features veteran Hollywood journalist Kim Masters, as well as a special companion email from Eriq Gardner, focused on entertainment law, and weekly box office analysis from Scott Mendelson.
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