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Disney and ESPN are Making Television Worse by taking Content Inhouse

I’m not prepared to go all doom and gloom like some people and say it’s all over for Netflix, but unless they take corrective action now, they’re likely to lose a great deal of significance in the coming years. Disney announced yesterday on its earnings call that company is accelerating its purchase plan of BAMTech, and launching a paid streaming service for the Mouse and for ESPN. ESPN’s service will launch in 2018 and Disney’s streaming will launch in 2019. Disney will then remove its content from Netflix, and I have to assume ESPN will want to reduce access or completely remove WatchESPN access to cable subscribers.

Continue reading Disney and ESPN are Making Television Worse by taking Content Inhouse

Is DraftKings a Suitable Business Partner for ESPN and Disney?

As I woke up on the morning of September 6, 2015, I had 3 things on my mind – the first being to make a large, 12 cup pot of coffee; the second being to make breakfast for the family; and the third being to watch college football for the first time in 2015. After successfully pouring my first cup of java (black) and making breakfast (chocolate chip pancakes), I reluctantly turned on ESPN’s College Gameday. The reason for turning it on wasn’t to actually watch it, but rather to allow it to bleed into whichever Big Ten matchup was chosen for the 11:00 AM time slot.

As I continued sipping my coffee from my spot on the couch, I perused Twitter and jumped into a Slack conversation with Damien, Mike and Mitch. Then ESPN’s Gameday crew started discussing something that caught my attention. They began making their picks based on the gambling spread.

In and of itself I have no problem with ESPN using the gambling spread even for college football games. I am old enough to remember Jimmy The Greek on CBS’s NFL pregame show so gambling isn’t something that bothers me. My father also had a hand in off-track horse betting which means gambling helped put food in my mouth as a growing boy. What did surprise me is that ESPN would choose to use the spread when discussing college kids. The topic of paying college athletes is a hot topic, so I didn’t think framing their college picks with the spread would go over well.

If using the spread weren’t enough, ESPN went a step further and began offering cover alerts. When a team was getting ready to score, the network would chime in and let the viewers know what was on the verge of happening. College administrators quickly took objection to this and the cover alert feature on ESPN’s college football programming was removed. ESPN appears to be straddling a fine line when it comes to gambling. Picking games against the spread is acceptable, but alerting fans when a team is about to cover that spread is considered unacceptable. Interesting to say the least.

While I don’t agree with it, I do understand why college administrators are against gambling and why they would pressure ESPN to take a step or two back from framing college football games within the perspective of gambling. However, the fact of the matter is that people have gambled on college sports and will continue to do so regardless of what college administrators or ESPN choose to do.

Just as ESPN straddles a fine line when it comes to gambling, so does our society as a whole. Betting on sports is considered illegal in forty five states with Nevada, Oregon, Delaware and Montana being the 4 exceptions. The reason that sports gambling is legal in these 4 states is because it was legal prior to the Professional and Amateur Sports Protection Act being passed in 1992. These 4 states benefited from a grandfathering clause.

Like it or not, $60-70 billion is annually bet on college football. Game in and game out this is going on and yet we don’t see the purity of the game being sacrificed. This purity is ultimately what those against betting on college sports are fighting to maintain. The fear is that bookies and mobsters would infiltrate college sports and games would be thrown and point shaving would occur.

If throwing games and wide spread point shaving were truly going to be the end result of legalized gambling, wouldn’t we have seen it play out in games involving UNLV or Oregon? While it is a possibility, I just don’t see the purity of college sports being tarnished through gambling.

There have been 4 publicized point shaving incidents involving college sports and all of them involved basketball; the Dixie Classic (1961), the CCNY scandal (1950-51), the Boston College scandal (1978-79) and San Diego St (2009-10). Something that is worth noting here is that none of these publicized incidents occurred in a state where gambling was considered legal.

So why does ESPN both endorse and frown upon gambling? Well, it’s about business for them and part of their business is about creating perceptions. Current ESPN host, Scott Van Pelt and former ESPN host and current Fox Sports host, Colin Cowherd each weighed in on this topic.

Van Pelt hosts a midnight SportsCenter and chose to use over 2 minutes to talk about how daily fantasy sports is gambling. There are 2 giants in the daily fantasy market and they are DraftKings and FanDual. Part of the debate on sports gambling is whether or not the daily fantasy market is gambling. Van Pelt is arguing that businesses such as DraftKings and FanDual are gambling organizations. It should be noted that ESPN and DraftKings have a partnership and, yes, DraftKings daily fantasy does include college football.

The partnership with ESPN and DraftKings is where things get interesting. On the surface, I am surprised that ESPN supported Van Pelt going after DraftKings. Simply saying that DraftKings is a gambling site isn’t controversial; however, saying it is gambling site while ESPN is trying to distance itself from college gambling is controversial. And again, ESPN is straddling a fine line. That fine line is worth straddling in this case because, even though Van Pelt was being critical of an ESPN business partnership, his words were still drawing attention to daily fantasy sports and would likely drive traffic to the DraftKings website.

Colin Cowherd is a controversial sports personality and he owns that reputation. In the end, he proved to be too polarizing for ESPN and moved on to Fox Sports. To some degree it is not surprising that he would use this topic as an opportunity to attack his former employer, but I have to say, I agree with Cowherd’s opinion on this subject.

Like Cowherd stated, like it or not, sports gambling is here to stay and all the moral handwringing in the world is not going to change that fact. Cowherd talks about ESPN being Disney-owned and Fox being family owned. The difference, in his mind, is that Fox is able to take more risks while Disney has to keep their entire operation as family friendly as possible.

Furthermore, Cowherd’s assertion that ESPN has become reactionary is spot on in my opinion. They are being reactionary in this instance just as they were with the handling of Steve Patterson being fired by the University of Texas. Like Cowherd said and like I suggested, ESPN’s employees could be on the chopping block based on Disney’s bottom line. When a company finds itself in a real or perceived financial crisis, it will take the safe route more often than not. In the case of ESPN, they are taking the most transparently safe route possible while still supporting DraftKings seemingly behind the scenes.

Disney had considered making a $250 million investment in DraftKings. If that deal had gone through, DraftKings would have been worth around $900 million. As is the case with most umbrella companies, what is good for the image of company A isn’t necessarily good for the image of company B. This is certainly the case when examining the business interests and professional image of ESPN and Disney.

Disney’s image is known to everyone. They are Mickey Mouse, The Princess and the Frog and The Little Mermaid amongst a myriad of other children’s characters. The thought of Mickey running a backroom gambling ring with Dr. Facilier as his enforcer while the Little Mermaid waits for Papa Mickey to return home each day is just a bit much for Disney to stomach. This image is not, however, problematic for ESPN.

So while ESPN is unable to have investment money tied up in DraftKings, they are able to sell advertising time to DraftKings. Please remember, ESPN also tried buying upt toa 20% share of DraftKings, which, for obvious reasons, Disney balked at. ESPN did the next best thing with the on air advertising time sold to DraftKings. DraftKings is paying ESPN roughly $250 million for the right to advertise across the ESPN platform. While that seems like a lot of money, it will surely be dwarfed by the revenue stream that is created from advertising on the worldwide leader in sports global network.

Scott Van Pelt is not the only personality arguing for daily fantasy sports to be reclassified as gambling. Rep. Frank Pallone (D-NJ) is requesting that a Congressional hearing be convened to discuss the subject. One of Pallone’s strongest supporters is Senator Harry Reid (D-NV). When asked about daily fantasy sports, here is what Reid had to say:

As some of you know, in one of my prior lives, I was chairman of the Nevada Gaming Commission, and during those days, we were the only gambling deal in town. Gambling is a very difficult thing to control, and it’s — when you have the commodity as cash, it’s very hard to control.

And so I — one, when I was recovering from my injury, somebody sent me a long book to listen to dealing with fantasy sports. To be honest with you, I appreciate the gift, but I — it just didn’t mean anything to me. I’m not into that stuff. I like the real thing. My point is, I hope there’s ways of controlling this money that’s obviously being bet on fake games and fake players.

Let’s be crystal clear about Reid and the position he is taking on this. DraftKings is located in Massachusetts. MA is not one of the 4 states that was grandfathered into legalized gambling. If DraftKings was forced to reclassify itself as a gambling organization, it is doubtful that they could remain in MA. How convenient that Reid represents a state with legalized gambling.

Just imagine what labeling daily fantasy sports would do for Reid’s constituency. Reid could offer a rich incentive to DraftKings to relocate to Nevada and voila, job creation and revenue creation along with the added bonus of increasing union membership in his state. That would be something that Reid could really hang his political hat on.

Time and time again we see this sort of business practice with ESPN and, to be fair to the network, it is most likely being influenced by Disney. It all comes back to Disney forcing ESPN to be as family friendly as possible; even if that means ESPN comes off as being hypocritical. ESPN is able to be hypocritical because most people either won’t acknowledge their hypocrisy or simply won’t care about ESPN’s hypocrisy. Week in and week out this hypocrisy is on full display. All you need to do is compare the behavior of ESPN and their employees to much of what their Outside The Lines show digs into.

Like Cowherd asserted, gambling is here to stay. It does not matter how much legislation is passed or how many NCAA guidelines are handed down, gambling will take place. If gambling truly caused the problems that its critics suggest, we would see far more peculiar outcomes on the football field and basketball court.

If anything comes out of this, my hope would be that gambling is legalized in all fifty states. But let’s be honest, we all know that isn’t happening. If that were to happen, the legislated monopoly of legal gambling would be infringed upon and Harry Reid and his cohorts wouldn’t stand for that. In the meantime, ESPN will continue to straddle that fine line of public support and public admonishment. That is really what we should expect from ESPN based on their past behavior.