Deeper with ESPN’s John Skipper on Apple, Sling and Sports Rights – Wall Street Journal

These days, ESPN faces two questions more than any others: When are you going to go “over the top” by offering the sports network to cord-cutters? And how are you possibly going to make enough money in the future to cover ever-rising sports rights payments if cable subscribers are declining?

John Skipper, the network’s president, outlined in an interview with The Wall Street Journal why the sports behemoth won’t be making a sudden move to offer its traditional TV channels outside the cable bundle. But that doesn’t mean the company isn’t on the offensive in the streaming TV world, he noted.

Below are additional excerpts from that interview with more details on his thinking about over-the-top TV and sports rights:

WSJ: In your view, will the people who sign up for streaming TV services from Sony,
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Sling TV, and possibly Apple make up for losses in traditional pay TV subscribers?

Mr. Skipper: We think that it can be a significant mover in helping us navigate the next few years. We see the Sling TV numbers, which are significant. We’ve had discussions with Apple. I believe in 2016 there will be further announcements on other kinds of packages….that will get younger subscribers into the market. We don’t think of it as an offset. It was simple before when we had subscription and television ad revenues. Now we’ve got more buckets. We have new direct-to-consumer, digital advertising [revenues].

WSJ: Is it true that you had certain options in your Sling TV deal that allow you to terminate the contract if it is cannibalizing your core pay TV business?

Mr. Skipper: I’m not going to contradict that. Our concern was: there is no financial benefit to us if people trade down [pay TV packages for Sling], but there is financial benefit to us if new entrants come in. We’ve had meetings with Dish. They, to our complete satisfaction, have showed us their research. We are highly satisfied that the overwhelming majority of Sling TV subscribers are new entrants.

WSJ: Does Apple have a path to being a player in the TV industry?

Mr. Skipper: They are creating a significantly advantageous operating system and a great television experience and that television experience is fabulous for sports. We are big proponents of believing it would be a fabulous place to sell some subscriptions. We have ongoing conversations. They have been frustrated by their ability to construct something which works for them with programmers. We continue to try to work with them.

WSJ: What happened to the idea of launching a streaming service with the NBA?

Mr. Skipper: We did not get to that as quickly as we hoped. We did buy some rights. We and the NBA did some exploring about doing an over-the-top service. We haven’t gotten to that yet. We haven’t abandoned it. You’ll see us continue to look at that. We’re still looking at other opportunities to go direct-to-consumer.

WSJ: A lot of your sports rights deals are locked in for years. Given how pay TV is changing, how will that affect your negotiations with the leagues?

Mr. Skipper: It’s too soon to predict. Sports is a growth business. I think it would be foolish to predict that sports rights (prices) will decline. We hold more sports rights than the rest of the sports media combined. All we have to do is use all those rights to create continuing growth in revenue to cover them. To date, we’ve demonstrated that we’ve been able to do so, and I’m highly confident we will continue.

WSJ: Do you have any wiggle room with your league partners to adjust payments if things change and cord-cutting really picks up? Would you want that flexibility?

Mr. Skipper: We don’t have any contingent payment plans. We have rights agreements with defined payments. It’s probably not practical. I wouldn’t particularly entertain it if people came to me and said, “Gee, I’d like to do a deal with you, but if the economy’s worse I’d like to pay you less.”

Read more from Mr. Skipper’s interview with The Wall Street Journal.

Write to Amol Sharma at amol.sharma@wsj.com and Shalini Ramachandran at shalini.ramachandran@wsj.com