Hartford Business Journal Special Editions

DECEMBER 24, 2018 • HARTFORD BUSINESS JOURNAL | 17 By Sean Teehan steehan@hartfordbusiness.com T he year 2019 could prove to be a pivotal one for ESPN and its president, James Pitaro, who took the reins of the Bristol-based sports media behe- moth last March. As the Disney-owned network withstands steep cable-subscriber losses — ESPN subscriptions dipped by about 2 million in fiscal year 2018 — Pitaro says the prime focus in 2019 includes expanding its digital offerings while making other moves to appeal to a younger, more diverse audience. "Innovation is a big priority of ours," Pitaro said in an interview. "In a nutshell: direct to consumer, expanding our audience, quality storytelling and innovation; that's really been our focus, and those are our priorities as we move forward." Less than a year into the job, Pitaro says he doesn't feel like the new boss. Before Disney Chairman and CEO Bob Iger tapped him to replace former ESPN President John Skipper, Pitaro had led Disney Interactive since 2010. Before that, he headed sports and entertainment at Yahoo, where he worked for nearly a decade. About a month after Pitaro started as president, ESPN launched its digital streaming service, ESPN Plus, which offers live sports and other original content. So far, the service has been more successful than expected, Pitaro said, attracting 1 million subscribers by September. "ESPN Plus is successfully doing several things: First and foremost it is serving the needs of hardcore sports fans who just want more," Pitaro said. "It's also serv- ing the needs of sports fans who … don't have access to the teams (or sports) that they really care about." ESPN Plus will need to continue attracting a high number of subscribers to partially offset revenue losses from a mass exodus of cable subscribers opting for online streaming services. Market research firm eMarketer projected that by New Year's Day, about 33 million cable subscriptions will have been canceled in 2018. The $5-per-month streaming service doesn't match the rates ESPN enjoys from cable providers — which Pitaro wouldn't disclose, but has been reported to be about $8-a-month for each subscription — and is unlikely to fully recoup all lost cable revenues, said Rich Hanley, co-director of the sports studies program at Quinnipiac University. ESPN at one time enjoyed a monopoly over 24/7 sports me- dia, but the rise of competing networks and streaming platforms has diminished that competitive advantage. "It's highly unlikely that a revenue torrent of that size and weight and volume will transfer to an internet service … ," Hanley said. "It just means the gravy train won't have as much gravy." However, Hanley thinks ESPN will remain profitable. People within the coveted 18-to-34 age demographic are statistically more likely to opt for a digital service over cable subscriptions than older generations, according to a Pew Research Center Study last year. Pew data shows 61 percent of Americans between 18 and 29 primarily watch TV on streaming platforms. But going after that digitally native audience means more than offering a streaming platform. Over the next year, ESPN will be increasing its NBA content, Pitaro said, as that league grows in popularity, with the number of fans in the U.S. up 4 percent last season over the previous one, a larger increase than any other major professional sport, according to Nielsen Sports Sponsorlink. Additionally, a $1.5 billion five-year deal with UFC will put 30 of the mixed martial arts leagues' events on ESPN's cable and streaming platforms in 2019, and each of the following four years, ESPN announced in May. Viewers can also expect more esports content on ESPN, Pitaro said, noting 2018 marked the first time the network included a video-game tournament on its flagship cable-channel lineup. Company data shows ESPN fans are turned off by political content, Pitaro said, so his goal is to avoid it. Even so, a Supreme Court decision last May is driving another content initiative there. "I think it's fair to say that you'll see more content related to sports betting across ESPN, both linear and digital, and that attracts a younger audience as well," Pitaro said, noting that the gambling-centric program, "I'll Take That Bet," began appearing on ESPN Plus shortly after the nation's High Court struck down a fed- eral anti-sports gambling law. "It'll be a combination of shows that are specifically tied to sports betting, and programming that is built into existing shows like Sports Center," Pitaro said. Beyond that, Pitaro said ESPN will work to expand its female and Hispanic audiences. Bristol focus Unlike his predecessor, Pitaro — a native of Westchester, N.Y., who lived in Los Angeles for 18 years — moved to Connecticut when he took the job running ESPN. And he's committed to running the network from Bristol, he said, even though the company also has studios in various locales including Los Angeles and New York. ACC Network, which will cover the NCAA's Atlantic Coast Conference, is set to start broadcasting out of Bristol in August, Pitaro said. Investing in Bristol will be a priority over the next year, he added. Talking about how he wants people to view ESPN under his leadership, Pitaro said it's pretty simple. "A contemporary sports media company," Pitaro said. "A sports media company that's nimble, that is creative and ahead of the curve." Pitaro to oversee a pivotal 2019 for ESPN TO WATCH 5 TO WATCH

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