Media Analyst Rich Greenfield Dishes On Sports Media Evolution, Snapchat, State Of ESPN, Barstool Sports

NEW YORK CITY — On Wednesday night, Sports Business Chronicle hosted another members meetup in Manhattan where we were joined by media analyst Rich Greenfield for a 45-minute conversation about all things sports media.

Greenfield, who’s also an angel investor and previously worked at Goldman Sachs, regularly follows what’s happening at the intersection of sports, media, digital and technology as part of his role at BTIG.

Below is much of last night’s discussion in its entirety, which includes talk around ESPN’s new OTT streaming service ($4.99/month), the Barstool Sports vs. Bleacher Report debate, what consumers want in a sports media brand, how sports-centric shows are performing on Snapchat Discover, Twitter and more.

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On state of ESPN, ex-President John Skipper’s exit and the Worldwide Leader’s new OTT service…

The only thing I can imagine is that time is of the essence for ESPN. There’s just so much pressure and kind of fear internally about this business that they couldn’t wait and be in a type of holding pattern for an unknown period of time. This is too important of a division. There’s too much focus on it, not just from the sports world but also from the financial world. ESPN’s going to launch this ESPN+ tomorrow, but the most fascinating part of this is that the head of ESPN+ isn’t reporting to the new head of ESPN (Jimmy Pitaro). ESPN+ is reporting to the former head of strategy (Kevin Mayer) where they’ve created a new streaming division. It feels incredibly awkward that you’re going to launch, what appears to be one of your more important initiatives in direct-to-consumer streaming, and it’s not even under the purview of whoever runs ESPN. There’s an awkward reporting structure that you’ll kind of get a sense of tomorrow. The whole concept of ESPN+ is sort of strange. I’m guessing most people sitting here today are subscribers to some form of multi-channel television. It may not be cable, it may be YouTube TV. It’s probably some platform because you’re a die-hard sports fan.

It’s pretty hard to be a die-hard sports fan and not have some form of a bundle. You can steal, but in general, you’re doing some form of subscribing. If you’re a subscriber to any multi-channel cable subscription, you’re paying roughly $8 or $9 a month for ESPN already. That’s over $100 a year where you’re contributing to ESPN. I guarantee you as you go across the 85 million homes in America that do subscribe to ESPN, there’s a huge number of them that are not sports fans. So, when you think about ESPN+, not only are they asking you to spend $100 but to cough up another $60 a year for what is not the best content. It’s going to be not your local MLB game of the week, not your local NHL game. It’s going to be Ivy League sports, some tennis and boxing. I don’t want to say there’s going to be nothing.

There’s definitely an audience. There is a huge domestic demand, and I think you’re seeing this play out globally, there’s a huge demand to stream content. Making incremental content available online, there’s certainly an audience. Is it hundreds of thousands of people? A couple million? Or is it tens of millions? From what I can see so far, I don’t see a product that millions of people are going to be clamoring to have. This seems like a relatively niche offering that’s also going to have pretty high churn. If you’re a huge basketball fan and you need to have more than what’s on TNT, you need to have more than what’s on your local RSN, you have to have these incremental games, you can just subscribe during basketball season.

On evaluating ESPN 1, ESPN 2 and ESPN 3…

I’ve been getting a lot of questions about this and no one seems to know the answer to it. There was essentially three ESPN products: ESPN 1, ESPN 2 and ESPN 3, which used to be the old ESPN 360. When you used to turn on the U.S. Open, all of the extra courts used to be available on ESPN 3. The thing I don’t think we know right now is, is ESPN 3 disappearing? Will there still be content that doesn’t air on TV that airs on ESPN 3 as part of Watch ESPN? Or is everything that appears on ESPN 3 now a paid product where you have to pay? If the latter is true, then the subscription that you’re paying $100 a month for, it is getting less valuable than what it was before. You’re not paying any less for it, but they’re taking stuff away and putting it on something you have to pay incrementally for. I don’t know that to be true.

On hyper-local sports journalism, venture-backed The Athletic, decline in newspaper jobs…

I’m not sure if anyone saw the front cover of the Denver Post earlier this week but it was basically the editors and staff having a plea to save us. They’re basically being bled to the end of existence through cost cuts. I think in that model where people are unwilling to pay for — leave off the New York Times which is doing great, leave off the Washington Post and the Wall Street Journal — local market newspapers are a dying animal in a world of abundance of news and information. In that environment, it’s very hard to see how a reporter gets paid well by a traditional newspaper. The Athletic will give them probably a far smaller audience than what they had before, trying to go after the passionate fan. There’s a group of die-hard sports fans in every single market. … That audience, will they pay for something that is cultish to them with a reporter they’ve grown up with living and loving? Sure, I think absolutely. I love the idea of paying for unique content that has a voice.

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On digital sports network Overtime, complexities of sports rights…

Overtime…is going after, I would call it almost white space. High school sports is kind of uncovered, not terribly-talked-about. You might see it on ESPN if there’s an incredible dunk or an incredible play. Essentially, it hasn’t been followed. The idea that there’s just a wealth of incredible basketball and now they’re getting into football, of high school sports athletes that have never had a light shined on them. The beauty of the Overtime model is that they’re not sending out trucks, they’re not paying for rights. All of these athletes are dying for more promotion and to make themselves even more famous. They all want the contract. They want to be even bigger superstars.

Overtime has this beauty of being able to shine a light on incredible athletes without the cost and all of the conflicts that come with the rights that all of these programs have. A great example of the complexities of licensing rights is when ESPN launched its Snapchat show, probably six, nine months ago. Look, I think SportsCenter is kind of a dying brand. Leave that aside for a second. Even if you love the SportsCenter brand, the first day after they launched was a Tuesday, they were talking about what happened on Monday Night Football. ESPN doesn’t have the rights to show content from the NFL off of ESPN’s websites and apps. They could just describe the game, they couldn’t show highlights. It’s a great reminder of the complex web of rights and licensing that happen in the college and professional sports worlds. Overtime, they’re going after this unique white space. I love that idea.

On the Bleacher Report vs. Barstool Sports debate…

They’re completely different. Bleacher is trying to be a true sports media brand. I think Barstool is really trying to span the gap between comedy and sports. They’re really trying to merge sports and comedy. I don’t think they’re trying to do the traditional sports news that The Athletic would run or maybe an ESPN.

On what consumers want from a media brand, ESPN’s place in the sports market…

Consumers really want something where there’s brand delineation. I think about, to me, what defines something like Barstool is if (Founder) Dave Portnoy said there’s a WeWork at wherever we’re at in an hour, you’d have hundreds of people lined up in this WeWork right now, without a doubt. They have a passionate and loyal fan base that is very hard to create. When you have that passionate, engaged audience — whether you have a Sirius radio show or want to have a video product that’s part of a bundle — it creates lots of opportunities when you establish that brand loyalty and really have that engagement around the brand that is really hard to get. It’s the thing that’s missing. I don’t think people are growing up passionate about the ESPN brand the way I was passionate growing up about ESPN and SportsCenter. I think (Bleacher Report’s) House of Highlights means more to someone today. I wear my House of Highlights shirt and people are like, ‘Where did you get that?’ Nobody says, ‘Where did you get that ESPN t-shirt?’ It doesn’t resonate anymore.

On ESPN’s Snapchat show on Discover…

Do you believe that if you watch ESPN’s Snapchat show, it’ll drive you to watch or care about subscribing or watching the linear sports network? I think that’s hard to imagine. I don’t think any of the Snapchat stuff is doing a great job of driving people back to the linear ecosystem. I think of it this way: it used to be that the only way to get SportsCenter is you had to spend…effectively $100 a year through a cable subscription. You couldn’t have ESPN and the full highlights of SportsCenter. Now, they’re being made available on Snapchat, which is a free app the last time I checked. There’s no registration or wall. Just enter your mobile phone number, and you can start watching SportsCenter on Snapchat Discover. There’s limited ad interruption, no 30-second spots. If you don’t like the ad, just swipe.

Part of what’s interesting about it is you have content creators like ESPN that are desperately trying to get the younger audience involved so they’re putting the content up, but it does seem to make it that much harder to say to your audience, you’ve got to pay X to watch our content on our cable network. Why even bother with SportsCenter on TV when you can get the highlights directly from the leagues on Twitter or from Snapchat’s ESPN channel? They’re making it harder and harder. They make a lot more money from TV than they do online. I’m not sure the trade off to be relevant makes a ton of sense. But again, this isn’t an ESPN problem. I’d say the same thing about Cosmo, I’d say the same thing about a lot of those Snapchat channels. I know why they’re doing it, but I don’t know if the math actually works.

On ESPN going fully over-the-top and what obstacles would present themselves if it did…

The problem with going fully OTT, which I don’t think they’ll ever fully admit to, the single biggest problem they face is sports is tribal. It’s local. You’ll watch and maybe care about a national game, but you really care about your local teams. I’m not going to say everyone. If we take 100 million U.S. households, how many have passionate sports fans? Let’s be kind and say 60 million of those homes have at least one passionate sports fan. Now of the 60 million, how many have a passionate sports fan every month of the year? It’s not 60 million. Is it 30 million? I don’t know. It’s far less than 60. When you start running that math, you start thinking to yourself, ‘OK, how much do I actually have to charge?’

First off, if you’re going to have far less than 85 or 90 million subscribers, you got to raise your price dramatically. You also have to compensate if you’re only going to have some of those subscribers for four, five, six months of the year. Then you have to raise the price even more. The price point could be $30 or $40 a month. That’s a really tough price point to stomach for most people. It kind of points out why they haven’t done this. By getting everyone in America to pay $8 or $9 a month, they’ve been over-earning for so long. There is no better business model than what they have now. You’d rather ride out what you have, try to double dip, try to do your cash grab, but I actually kind of agree with where you’re going. Not the full reason, and it’s complex, but I don’t think they really can. They are stuck between a rock and a hard place, that there really is no way out, especially with sports right appearing like they’re just going to keep going up.

On change in consumption habits for Gen Z and Gen Alpha and what they want to consume…

I was at Seder dinner last Saturday night, and all of the adults went into one room to watch the Final Four semifinals, 6:30 or 7, and then every kid from 14 on down went into another room to play Fortnite, could not care less that the Final Four was on. They yelled in every once in a while or checked to look at the score, but literally had no interest whatsoever in sitting down to watch five hours of basketball. It’s a huge problem. When you can watch highlights on Twitter, highlights on YouTube, highlights on Snapchat, why watch the whole thing? Why bother? The best stuff is already curated for you. It’s something that should scare all of the leagues substantially and all of the cable networks. This whole generation isn’t interested in watching three hours, with commercials, stoppages and halftimes. It’s just not in their DNA.

On how and when ESPN has lost its way a little bit…

It’s hard not see the explosion of content online. Ten years ago, we didn’t use mobile phones. You mentioned your behavior of getting up in the morning and watching SportsCenter. I think 10 years ago everyone did that and checked what happened the night before. On the way home from school or practice, I remember listening in my dad’s car to Mike and the Mad Dog. The problem is now you kind of know everything the minute after it happens or while it’s happening. That makes it very hard.

ESPN’s kind of got stuck in this place is the only time people want to watch is when there’s a live sporting event. Well, the rest of that filler isn’t all that interesting. They don’t seem to have enough of the critical, must listen to personalities. Even when they’ve tried to bring on new things, like with Barstool, they’ve screwed it up. They just don’t have those kind of cult followings that would drive engagement. If you look at why Fox News works, and forget about your political biases, the reason why Fox News works is it’s highly, highly engaged with a cultish following audience-wise. I don’t think ESPN’s talent team has that cultish following. Look, maybe it’s not possible in sports, but I certainly don’t think ESPN has done a good job of curating that experience. It’s basically become a set of channels where if there’s a game on that you’re interested in, you watch. When there’s not, you don’t even know that it exists. We don’t channel surf anymore and just sit down and say, ‘Hey, I wonder what’s on TV tonight’. People are very much purposeful with an exact destination.

On the tipping point for the number of subscriptions consumers are willing to pay for…

Someone asked me that recently at dinner. How many subscriptions do you pay for? My knee-jerk reaction was only a few, and then I started thinking, ‘I pay for iCloud, I pay for Evernote, I pay for the New York Times‘. You start adding them up and you go, ‘Shit, I subscribe to a lot of things’. It all kind of adds up to all of these so-called micro-subscriptions of things that you’re paying for. I think as long as these things add value, that the number can be pretty high.

On Twitter’s place in sports, creating a SportsCenter of Twitter…

Twitter, for a while, has felt like sports talk radio did 20 or 30 years ago. It’s the water cooler conversation, it’s the sports talk. It’s where people are yelling at each other. It’s sometimes not even people, it’s the athletes getting involved in the conversation and even accelerating the conversation. That’s the beauty of Twitter is it provides this incredible forum of sports news and information. The leagues have all recognized it. They’ve made highlights easier to get to. You’re watching an NFL game and as fast as plays happen, they’re pushing out highlights right onto Twitter themselves. The leagues are hurting the Bleacher Report’s, they’re hurting the ESPN’s. They’re trying to own their own digital lives directly and get a better understanding of who their fans are.

Twitter is a huge opportunity. I’m sort of amazed that none of the major sports publishers have really taken advantage of it yet. I keep looking for someone to create the SportsCenter of Twitter, like a live running show highlighting what’s happening globally in sports right now. Kind of like how Bloomberg is trying to do on Twitter with harder news. No one’s done that. I thought ESPN was going to buy Twitter and turn it into SportsCenter, but they haven’t done that either.

About Mark J. Burns

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