Although leaders at ESPN may have roles that delineate focus in certain areas of the company, there is synergy evident within conversations and contributions towards the aggregate. ESPN chairman Jimmy Pitaro and his colleagues converse in a mandatory weekly meeting in which they discuss the company’s annual operating plan, five-year plan and 10-year plan. Throughout his career, Pitaro has strived to surround himself with people who are smarter than him, and there has been an ostensible return on investment on successfully identifying and nurturing future talent.
On top of that, Pitaro’s direct reports know that he wants to be challenged, a regular part of meetings geared towards fulfilling its mission. The decisions made within the company are guided by four pillars of “Discuss, debate, decide, align,” and it has held true as the company prepares to launch its flagship direct-to-consumer product next fall. The ESPN Flagship platform will allow consumers to receive access to view network programming without a traditional cable television subscription.
“This could be disruptive to the traditional ecosystem,” Pitaro said on the Corporate Competitor Podcast. “Now, we’ve done more than just about anyone to protect that ecosystem. It has been very good to us, and it will be a priority for us going forward. This is parallel paths. At the same time, we see declines month after month, year after year, and you get to some point where you have to disrupt yourself, and that’s where we are right now.”
Over the last decade, the pay TV penetration rate has declined as more homes opt to cut the cord and subscribe to OTT streaming services. According to data from Nielsen Media Research released this past summer, ESPN is distributed in under 68 million homes, down from its peak of 100 million homes a decade ago. Continuing to invest in the traditional ecosystem, he explained, would be a safe thing to do that would simultaneously be short sighted. While ESPN is not deprioritizing traditional distribution, it is making its networks available à la carte amid changing paradigms.
“There are 50 or 60 million households right now that are not subscribing to the traditional ecosystem,” Pitaro said. “There’s an opportunity there, but it’s called direct-to-consumer for a reason. Get them in, and we will have access to the data. There’s no middle person there. We will know what our sports fans, what our customers are consuming, and as a result, we will have the ability to present to them a more compelling digital sports experience – a more personalized experience, a more interactive sports experience – and that’s exciting to me.”
While ESPN is not as widely distributed on linear television as in the past, its ratings for studio programming, live game broadcasts and digital ventures continue to proliferate. Pitaro acknowledged that there has been a shift of thinking, commensurate with record numbers of households watching programming spanning different genres within its overall portfolio.
“Last year in Fiscal ’24 – our fiscal year ended [at the] end of September – we saw the most linear television consumption in prime time since 2006,” Pitaro said. “We saw the most total day linear TV consumption since 2016. Just think about that. In a world where 8% fewer households are watching television – and again, I’m not talking about share; I’m talking about number of people, number of households watching this programming, it is up, setting records.”
As ESPN continues to produce, disseminate and facilitate the power of live sports, he acknowledged that there have been heated discussions surrounding taking its networks over-the-top. Moreover, there are still conversations surrounding the name of the venture, price point and its exact launch date. Through discussion, debate, decision and alignment, the process surrounding the platform has moved forward and will be available next year.
“My goal is to decide as a team, and oftentimes, we are able to do that,” Pitaro said, regarding his decision-making process. “If we can’t decide as a team, Bob [Iger] and the board pay me to decide. That’s my job, but more often than not, we are able to decide as a leadership team, and then the expectation is that you align.”
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