ESPN Radio Wants $100,000 From Local Affiliates

ESPN is one of the great American business success stories of our generation. The company has gone from a small public access outfit in rural Connecticut to Disney’s most consistently profitable subsidiary. And it’s no coincidence.

Mike and MIke

(20,000 five-dollar-footlongs … or this? Umm, can you hold the mayo?)

At virtually every turn, ESPN/Diz execs have slowly built out the brand into a sports media monopoly.

And based on what I heard today, they’re not done. Not even close. 

A source told me that ESPN is planning to charge some non-ESPN owned and operated sports radio stations fees to carry its radio network programming. For big markets (Top 30), the annual charge to stations is as high as $100,000.

Even in good economical times, that move is a serious horse pill to ingest for local sports talk radio stations.

My reaction, as a former sports radio program director and on-air personality for 16 years (including on ESPN radio affiliates), is that very, very few (if any) Top 30 markets would pay a six-figure sum to air ESPN network programming.

Most, if not all of those stations make their money on local sports talk shows and play-by-play ad sales. Revenue from ESPN’s national properties is usually negligible - as most of its shows have struggled in the ratings against large market, local shows. (I know, not in every case.) Perhaps local stations could make money on ESPN Radio’s play-by-play properties, but not enough to make up that $100K rights fee in any scenario.

Also, Fox Sports Radio and Sporting News Radio are available to those local stations for no rights fee.

I’m sure ESPN execs would argue that it is worth paying a premium to ally with their brand, and they’re probably right. But not a $100,000 per annum premium.

I asked a prominent, non-ESPN sports radio program director in a Top 30 market about ESPN’s plan to charge for programming. Here’s his response:

I think more and more stations will look for syndication in the midday and evenings but no one is paying 100k for just that when you can hire or keep a local guy for less and I don’t see many of the top 30 markets making a move to full syndication, unless you’re talking about a market that doesn’t have more than one pro team.

However, markets that are already oversaturated with sports stations could be affected though I don’t think it signals the end of local programming because the stations that have proven success will try to ride out the bad economy. With SNR and FSR still around and FSR adding Dan Patrick to their syndicated menu, I also think ESPN will be hard pressed to get the 100k.

It’s a great brand, with some solid talk shows, and their play-by-play is superior to anything else out there, but does that justify a 100k investment when the other providers are free? Not in my book. Besides, making a switch to full syndication seems short-sighted and basically tells the fan of the local teams ‘don’t bother listening to my station anymore.’

That sentiment I’m sure is echoed by most large market program directors.

I contacted ESPN and asked Director of Media Relations Josh Krulewitz if ESPN was indeed asking for a $100,000 rights fee from local radio affiliates.

His response: “We don’t get into contractual specifics publicly. With that said each agreement and market is structured differently. They are all designed to be mutually beneficial to our affiliates and espn and are mutually agreed upon.

Perhaps that’s a signal that the $100K deal isn’t across the board for all large markets, but it’s clear now that the request is most likely in play in some cities.

All that said, I actually think dominating the smaller markets could be the whole reason ESPN is rolling out this rights fee arrangement.

Sporting News Radio and Fox Sports Radio are struggling financially, and both of those sports radio networks make their bones on small-to-midsize markets. If ESPN goes to those smaller market stations and asks for a nominal rights fee, they’re probably more likely to get it, since the ESPN brand has more resonance in those listening areas. In the big markets, you have local sports stations as brand names. In smaller markets, not so.

So if Bristol can pluck all the top stations out of hundreds of smaller markets, SNR and FSR are out of business.

It sounds a little counterintuitive I know: Why would any of those small stations take money out of their tiny budget to gain ESPN Radio rights? But by charging a small fee, ESPN might actually be elevating the value of its product in smaller markets, and give it an edge over lower-profile programming from FSR and SNR.

If you were in sports radio ad sales in a market like Bakersfield, would ESPN radio be easier to sell than FSR and SNR? Of course. So you’re more likely to pay for the right to sell it.

If ESPN ends up being successful in blowing out its radio competitors, that would be a shame, since we all know that more competition is better. In sports media, radio is one of the last places that ESPN doesn’t have a death grip. But this new plan might change that.

And after watching ESPN wreck its sports radio competition in Los Angeles recently by overpaying for the Lakers broadcast rights, which effectively put KSPN-AM competitor KLAC-AM out of business, I will no longer ever doubt The Mouse.