ESPN The Company

The Story and Lessons Behind the Most Fanatical Brand in Sports

Anthony F. Smith, Keith Hollihan

• Publisher: Wiley
• Year: 2009
• Print ISBN: 9780470542118
• eBook ISBN: 9780470564004
• Edition: 1
• Topic: Business
• Subtopic: Media & Communications Industry
• Index: Business

A fascinating look at ESPN and its success as a brand

ESPN The Company reveals the inside scoop on the biggest business story in sports, detailing the creative and innovative spirit and practices that drove the programming, products, and services of the most powerful and prominent name in sports media. The authors provide a behind-the-scenes perspective on how ESPN dealt with their many partners and how they handled mistakes and missteps along the way-from the humble beginnings of ESPN as an underrated startup to the pinnacle of their success as a major industry player.

ESPN and other great organizations invest in their people. They train them. They believe that if you spend the time and resources turning talented performers into leaders, you're going to get better organizational performance and engender higher levels of commitment and sweat. ESPN The Company

• Explores the dedication to excellence that makes ESPN the "Worldwide Leader in Sports"
• Reveals how the steps ESPN has taken to excel can be applied to whatever type of business you're in
• Shares the lessons learned at ESPN about launching and growing a wildly successful enterprise

Engaging and informative, this entertaining guide reveals how any company can benefit by embracing the best practices of ESPN.

Chapter 1

TURNING FANATICS INTO FANS

You arrive in Bristol, Connecticut, and you think ESPN.This is the epicenter of the known sports universe. The corporate headquarters are approached by highway, but when you near the gate you are greeted rather quietly by a small sign in simple letters reading “Welcome to ESPN.” The sign looks as though it hasn’t changed much since the organization was founded 30 years ago, utterly subdued compared to ESPN’s often boisterous shows, hosts, and guests.Very subtly, this is an important part of ESPN’s message to its people every day when they come to work: It’s about the fans and the sports, not ESPN.

Inside the gate, there are a myriad of parking lots and sprawling buildings, and a forest of satellite dishes, like a field of giant white mushrooms tilted skyward. Twenty years ago, when I first drove to ESPN, there were only a half-dozen satellite dishes, a couple of finished office buildings, and rows of temporary trailers—everything in flux, everything growing. Now, instead of giving off a corporate vibe, like stalwarts such as IBM or GE, the grounds of ESPN have the big-time aura of an Ivy league campus, but the look of a state-of-the-art high tech company. The rank-and-file employees are dressed casually and look about as young and diverse as undergrad students anywhere, though they are always in a hurry. The managers are often dressed more formally, a bit like professors at a business school, and the older executives could pass for top administrators and deans. There is often an expression of pride and—dare I say it—happiness on the faces you see. I’m not claiming ESPN is a utopia, and I describe its ways of doing business with candor and curiosity in this book, but the giddy energy always strikes me. This is the place to be if you are engaged by sports and television. Just by being here, the young people have achieved something special. The older hands who have been around for many years are noticeably proud of what has been accomplished, the growth of the business reflected in the number of buildings and satellite dishes. Before we get started, it’s worth considering how much that accomplishment means.

Now, the achievements of ESPN seem self-evident. Why wouldn’t a cable sports channel offering sports news, sporting events, and sports-related entertainment 24 hours a day be an incredible success according to all conceivable measures—spectacular revenue, intense brand awareness and loyalty, market supremacy, and consistently strong year-after-year growth? Sports consumers, after all, are fanatics. Like addicts of less savory fixes, they can’t get enough of what they desire. Throw more product their way—additional channels, new formats, a magazine, a web site, even sports they’ve never cared about before—and those fanatics will continue to consume whatever you’re offering while their needs and numbers grow.What business, given such an easy sell to such an eager market, wouldn’t be a success?

You could assign the achievements of ESPN to luck—the right place, the right time, the right untapped market—but that only brings to mind a quote from golf-great Arnold Palmer: “The funny thing is, the more I practice, the luckier I get.”¹ Certainly, there was luck behind ESPN in terms of timing, opportunity, the right leadership at different stages, and the decisions made at several critical junctures. But nobody who learns the full arc of ESPN’s story will evaluate all that and dismiss the amount of stamina, discipline, intelligence, hard work, risk-taking, and blood, sweat and tears that went into generating such luck. That’s why the lessons of ESPN’s rise to institution status and brand dominance are so rich.

The truth, of course, is that ESPN didn’t stumble fortuitously onto an untapped revenue stream and then work like hell to develop its claim. Rather, the market for 24-hour, dedicated sports coverage on television didn’t exist before ESPN created it. ESPN’s founders, leaders, backers, and key employees generated that market by understanding the desires of people who follow sports like addicts and striving to fulfill those wants. They identified loose and disorganized fanatics—people with an unchanneled passion for the sports experience in many different forms—and turned them into loyal fans—customers focusing their eyeballs, water cooler conversations, and cable dollars on what ESPN is offering.

One reason the people behind ESPN were able to do that successfully is because they are fanatics themselves. That’s the two-sided lesson I explore in more depth in this chapter. In my experience, other successful companies have also turned fanatics into fans—on the customer and employee side—but those organizations are as rare as they are noteworthy, and few have done it as well as ESPN.

In the interviews I conducted for this book, it was often said by the people who experienced the ESPN story firsthand that the company has gone through four distinct steps in development. I describe those steps so that ESPN’s business decisions and accomplishments can be understood throughout this book in the context of the situation at the time. The nuances and details of the ESPN story are expanded on in later chapters, but here’s a brief overview to establish the people, events, and time line we’ll be following.

Ready When the Red Light Goes On

Every organization goes through very distinct, and often predictable, stages of development. What many have labeled ESPN’s start-up began when it was conceived in 1978 and launched with venture capital funding in 1979. Those early, arduous years could be characterized as a constant scramble to patch holes in a leaky rowboat on a vast and unfriendly ocean while simultaneously endeavoring to discover an actual destination (and pretending all along that the rowboat is an ocean liner.) An ungainly metaphor, I agree, but one that anybody who has ever enjoyed the exciting, raucous, anxious, exhausting, sickening, inspiring, and rewarding time working at a start-up enterprise can probably appreciate, and may even fondly remember.

The vision and early energy for ESPN came from its founder, Bill Rasmussen, his son, Scott, and a few key backers and supporters. Rasmussen was a true sports fanatic who had worked in advertising before landing a patchwork of dream jobs in sports that combined sales, management, and play-by-play broadcasting.While working as the communications director of the WHA hockey team, the New England (Hartford) Whalers, Rasmussen gained experience producing sports television and events. Then, after a falling-out with Whalers ownership, Rasmussen found himself unemployed and anxious to see if the tickle of an idea he’d been carrying around for a couple of years could be transformed into a viable media business.

Rasmussen’s original business concept was to fill the need for more local sports coverage in Connecticut. The Whalers had few of their games televised, and NCAA sports involving UConn (University of Connecticut) were popular statewide, but rarely available on TV. Technology, distribution and cost turned out to be problematic. A few conversations with local cable operators gave Rasmussen an awareness of how complicated and expensive it was to distribute original programming in discrete blocks of time. It was through those initial inquiries, however, that he stumbled onto the idea of broadcasting via satellite—still an extremely new and barely understood technology in 1978. Investigating further, Rasmussen learned first that satellite signals could be broadcast all over the country to local cable operators, and that this made more sense than distributing within a single state like Connecticut. The idea began to expand. In addition, Rasmussen was told that it was actually cheaper to broadcast for extended hours than in limited time slots. That data ingested, the opportunity it represented must have jolted Rasmussen with a sped-up heart rate. The vision of a dedicated national sports network was suddenly obvious and tantalizingly possible.

The satellite system Rasmussen encountered (more in Chapter 2) had only been commercially available for a few years but the channels HBO, Showtime, and TBS were offering movies and network TV reruns that way. In discussions with local Connecticut cable operators, Rasmussen learned that cable companies picked up those signals and distributed them to subscribers in a mild and not very effective way of competing for viewership with the big three networks—CBS, ABC, and NBC. Fox, you will recall, was not a player back then. In an example of one of those periodic moments when the dominant power misses the emergence of the next ferocious competitor, executives at the big-three network channels did not see cable or satellite as a threat; indeed, they hardly noticed the existence of this parallel system of broadcasting. Rasmussen made his pitch for an all-sports network to cable operators with all this in mind. Although the cable operators were skeptical of Rasmussen’s idea for a dedicated sports channel and indeed skeptical of Rasmussen himself, he believed that if he could get his sports programming onto the air using a satellite, they would be willing to distribute those events to households with cable connections. This viewership was still a small market in 1979—only 20 percent, or 14 million, households in the United States had cable connections then—but the timing was absolutely right. Entrepreneurs who believed in the growth of cable—men like Ted Turner, John Malone, and Charles Dolan—were about to become moguls.

Soon, Rasmussen and his partners entered that feverish phase of a start-up when ideas suddenly begin to become real, and the demands of planning, selling, and building a business tumble together at an ever-increasing speed. They needed a name, financing, satellite access, programming, cable affiliates willing to partner with them, a business location, and experienced television production managers—all at once. They propped up their tent with multiple poles, shoring up one aspect of the venture with the tenuous commitment of a cable operator, satellite signal provider, sports partner, or financial backer, then raced across to bolster the other side before it sagged and collapsed. They did not know what they were doing until they needed to do it. They learned along the way, picking up information, ideas, and strategies when forced by each new crisis to make a decision or change course. They ran out of money, maxed out their credit cards, and avoided bill collectors. They bluffed business partners and cynical journalists, bringing skeptics along until the next deal arrived just in time and allowed the journey to continue. They stretched the truth, and turned difficult and complicated plans into reality by proclaiming confidently, with a salesman’s faith, that those plans would come to pass. Most importantly, they began to draw others in—those fanatics I mentioned—who may have doubted Rasmussen’s ability to pull it all off, but never doubted the potential and excitement of the idea he was pushing.

The name was inspired. Cable operators, enamored with the success of the movie channels being distributed by satellite, wanted movies to be part of the offering. Rasmussen came up with the word entertainment as a compromise that was vague and inclusive enough to capture what they wanted to bring to viewers and still keep cable operators happy. The Entertainment and Sports Network, or ESP Network was the result. Within a few months, this was shortened to ESPN (reportedly by the graphic designer who thought it looked better that way) and the lettering was fashioned into the distinctive logo.

Despite the call for movies and TV shows, Rasmussen remained focused on showcasing sports events that weren’t being covered by anyone else. Theoretically, they would be cheaper to run since no one else wanted to show them and would better resonate with niche sports fanatics. For example, Rasmussen and his partners knew that televised NCAA games would be treasured gems among avid college sports fans who had previously been unable to watch them, as they were outside the realm of the traditional channels.

From its original vision, to subsequent ideas, ESPN needed to find funding.Their first infusion of money came from a bizarre source, completely outside the New York—centered media or advertising worlds. Given the extent to which ESPN was violating all rules of conventional television wisdom, perhaps this should not be so surprising. In the search for financing, Rasmussen and his partners ran into Getty Oil, flush with cash and looking for investment opportunities. Rasmussen pitched his business plan to a Getty vice president named Stuart Evey, who was in charge of investments into noncore assets. Evey agreed to an initial $10 million infusion and soon exercised an option to secure ownership over 85 percent of the venture.

Evey was a character, an extreme version of the many strong, volatile, passionate, and excess-oriented personalities that ESPN attracted in its youth. He was a sports fanatic with a secondary craving for the media, show-business, and deal-making drug. Not surprisingly, he gravitated from the staid world of oil production to the flash of a sports television start-up and became fully immersed in ESPN decision making and operations. This generated turmoil in the leadership ranks, a series of power plays, ego fights, and turf wars that somehow managed to seem normal in the rushed day-to-day struggle to get the business off the ground. Rasmussen didn’t like being overruled, discounted, and undercut, but money won out. As a result, the founders of ESPN would be evicted within a year.

The Getty money was desperately needed, however. In another nick-of-time event, Budweiser came through with a million-dollar advertising commitment, the largest in the history of cable. This was a cannon shot across the bow of the networks, cable affiliates, Wall Street, and Madison Avenue announcing that ESPN might just be for real. And in fact, between the Getty money, the Budweiser advertising deal, and a freshly inked two-year contract with the NCAA to broadcast games, ESPN was for real, just a few short months before it was scheduled to go live at 7 P.M. on September 7, 1979.

Trucks, cameras, a satellite dish, a studio, offices, programmers, and on-air talent—ESPN needed everything that a big network needed, but had almost no resources and no base of experience to draw from. The coup de grace in ESPN’s prelaunch struggle was securing the services of Chet Simmons, then president of sports at NBC. Simmons, who had been involved in the launch of ABC’s Wide World of Sports 20 years before, was waiting for a contract from NBC, and growing irked about being strung along. So he took a leap at a significant salary offer from ESPN even though he had already publicly dismissed the idea that cable sports could compete with the networks.

As the new president of ESPN, Simmons brought truckloads of sports television experience, big-league credibility, and—most importantly—extensive industry contacts. Starting with Scotty Connal, another sports executive, Simmons lured so many top executives and talent from NBC that ESPN in its early years was known by insiders as NBC North.

One industry hand was Bill Creasy, whose story is a good illustration of how and why talented people were drawn to the venture. Creasy had been one of the first graduates of USC’s new telecommunication major in 1953, after which he worked in television, producing or directing sports events. For much of the 1950s, he was employed by a company called Sports Network Inc. located in Midtown Manhattan, in the business of renting production equipment such as trucks, cameras, and facilities. There, he got to know Chet Simmons because Simmons worked across the street for a rival company called Sports Programming Inc., which was later bought by ABC and turned into its sports department. Creasy’s career began to soar when he became a producer of note in the CBS sports division, directing baseball games (including the Major League Game of the Week), football games (including the infamous Ice Bowl NFC championship game in Green Bay in 1967 and the first two Super Bowls), the Triple Crown, skiing in Europe, and NHL hockey in Canada.

Creasy took a four-year hiatus from sports production to head operations for the Oakland Seals of the NHL until the team was sold, then worked in horse racing before Simmons called in the summer of 1979 and asked if he wanted to get back into live television as ESPN’s head of programming. Creasy felt the bug and was not afraid of working for a start-up with a man as respected as Chet Simmons involved. The offices in Plainville, Connecticut were a shock, however, to anyone who had worked with network budgets. On his first visit to the two-story commercial building where ESPN had set up, he saw that the entire first floor of the building was occupied by United Cable (which was later purchased by Comcast) and filled with rows of audiotape machines, like banks of IBM computers. Upstairs in a glorified attic space he found ESPN headquarters, a series of wooden picnic table-like desks crammed so closely together that one person couldn’t stand up without the person behind wiggling out of the way. But it was live sports and it was exciting. ESPN offered Creasy a salary and he moved into the Plainville Holiday Inn in June 1979.

Construction work was ongoing at the site in Bristol, Connecticut where ESPN would set up its permanent campus. At the time, the programming facility amounted to a trailer and an outhouse. As the go-live date approached, Simmons, Connal, and Creasy put their heads together and scoured friendships and connections throughout the sports world to come up with any kind of programming that could fill the Sunday to Saturday grids—seven times the amount of sports programming the major networks were producing combined. At the same time, walls were going up, paint was being applied, a studio set was being built, and equipment was being installed and tested.

Doubts abounded, often in secret, occasionally in the open, and angry outbursts were common, but the pressure just made everyone work harder, obsessively focused on one imperative: Be ready when the red light goes on. A day out, Creasy started rehearsals on a script that wasn’t even finished yet. An actual studio rehearsal wasn’t possible until half an hour before ESPN was scheduled to begin broadcasting. Finally, with mere minutes to go, the studio was cleared, the first hosts of SportsCenter, Lee Leonard and George Grande, took their seats and the countdown began. When the red light went on, the signal was sent into the atmosphere to an orbiting satellite and, seconds later, back to homes across the United States.

ESPN went live with these words from Grande:

If you’re a fan, if you’re a fan, what you will see in the next few minutes, hours, and days to follow may convince you that you’ve gone to sports heaven.

It was a message that sports fanatics could understand.

Yes, But We’re Also a Business

The start-up stage did not end with the red light going on. The first SportsCenter broadcast was awash in technical difficulties, amounting to 30 minutes of amateur ni...

Table of contents

• Praise
• Title Page
• Copyright Page
• Dedication
• Acknowledgements
• Introduction
• Chapter 1 - TURNING FANATICS INTO FANS
• Chapter 2 - THINK LIKE AN INCUMBENT, ACT LIKE A CHALLENGER
• Chapter 3 - THE RIGHT LEADER AT THE RIGHT TIME
• Chapter 4 - CREATE YOUR OWN GAME
• Chapter 5 - EXPAND THE BRAND
• Chapter 6 - PLAYING WELL WITH OTHERS
• Chapter 7 - BLOW THE WHISTLE, SPOT THE BALL
• Chapter 8 - ARE YOU HAVING FUN?
• Notes
• References
• About the Authors
• Index