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Think of this as an end run - ESPN has the ball, it's sprinting towards the sidelines trying to turn the corner upfield. It's going around the cable companies that carry its signal to millions of homes. The giant sports network says it will offer a live streaming service separate from cable. This will happen in partnership with the Dish Network. To understand why ESPN is doing this, our colleague Linda Wertheimer talked with John Ourand with the Sports Business Journal.
LINDA WERTHEIMER, BYLINE: So ESPN just broadcast the college football championships. It was a huge cable audience - a big success. Why would they make a move that sounds like it would bust up a successful model?
JOHN OURAND: I don't think that they're viewing this as a move that would bust up that model. There is no company that has more at stake relative to the success of the cable bundle than the Disney company and ESPN, in particular. For ESPN, this is a move to attract the 12.5 million broadband-only homes who are right now on the Internet watching video via Hulu. They're watching broadcast networks and they're just not subscribing to cable.
WERTHEIMER: How big an audience would they need to make it work?
OURAND: That's a great question. I don't know. I know that if this gets too big, ESPN has the option to potentially pull the kill switch and pull out of it because they really do want to make sure that that bundle works. They get paid more than $6 per subscriber per month from cable and satellite operators. They want to do whatever they can to preserve it. What I think is interesting about this, Linda, is about who they ended up doing this with - Dish Network - which already has a satellite service that's out there. They didn't go to Apple and they didn't go to Google. They went to somebody who also has a stake in preserving that bundle - of pay TV bundle.
WERTHEIMER: You don't think then that is has something to do with a serious competition on cable - like Fox Sports 1 and NBC Sports Network that are sort of creeping up on ESPN?
OURAND: I don't think they're looking over their shoulder at Fox Sports 1 or NBC Sports Network. I do think that they are looking over their shoulder at people that aren't subscribing to cable. And they want to make sure that they can get their brand in front of those people as much as they possibly can.
WERTHEIMER: So do you think something like this would work for the true sports fanatic - I mean, the kind of person who's signed up for a cable bundle, but is also hand paying for extras, like the whole Major League Baseball season or the whole NBA season?
OURAND: That's the other point of this. If you're a baseball fan, the playoffs are on Turner and the playoffs are on Fox Sports 1. They're not a part of this. If you're a soccer fan, NBC's channels aren't a part of this. If you're a local sports fan, the regional sports networks - they're not a part of this. While ESPN has a lot of sports, they hardly have a monopoly on all sports. So if you just sign up for ESPN's streaming service through Dish, sports fans are going to be sorely disappointed by the number of big events that aren't going to be on it.
WERTHEIMER: It's just so tempting to look at this is as something that, you know, could possibly spell the death knell of cable. And you just - you really don't think that's it.
OURAND: I think that there's a logical way of looking at that and suggesting that it is. And, in a sense, it does mean ESPN is dipping its toe in the water of seeing what happens should the cable bundle disappear, but I believe that the cable bundle is strong. I believe that ESPN wouldn't do anything to hurt the cable bundle since that's where they make most of their money. So I think that this is a very early test to see how many broadband-only homes would subscribe to this sort of service. I think that it's an early test to see what the sort of price points are that people would pay for sports or pay for channels like ESPN - maybe a first a la carte test of sorts. But I don't think that this is - this means that the cable bundle's going to collapse anytime soon.
WERTHEIMER: John Ourand is a media reporter with the Sports Business Journal. Thank you very much.
OURAND: Thank you. Transcript provided by NPR, Copyright NPR.
