Stratechery The Rise and Fall of ESPN's Leverage
Sep 5, 2023
Explore the fascinating evolution of ESPN's negotiating power in the cable TV landscape. Discover how satellite technology propelled ESPN from local content to national prominence. Delve into the network's transformative 1980s shift to a subscriber model and the high-stakes battles for broadcasting rights. Uncover the ongoing tensions between cable providers and media giants as they face streaming challenges. This deep dive illustrates the crucial adaptations needed in an ever-changing media environment.
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ESPN's Origin
- ESPN's founder, Bill Rasmussen, initially envisioned a Connecticut sports network.
- Access to a nationwide satellite transponder at a low cost broadened his vision, leading to ESPN's creation.
Double-Edged Sword of Technology
- ESPN's creation was driven by the same economic forces that power the internet: massive fixed costs, zero distribution costs, and massive scalability.
- These very forces, while instrumental in ESPN's rise, also pose a threat to its long-term survival.
Affiliate Fees: ESPN's Lifeline
- Initially, ESPN relied on advertising, but this proved insufficient to cover costs as it grew.
- A shift to per-subscriber fees from cable operators, born out of near-failure, stabilized ESPN financially.