A full audio replay of today’s call

September 8, 2011

ESPN NFL Announcement Conference Call Transcript

George Bodenheimer, President of ESPN, Inc. and ABC Sports and Co-Chairman of Disney Media Networks, and NFL Commissioner Roger Goodell participated in a media conference call this morning to discuss ESPN’s new eight-year broad multiplatform extension for and other NFL rights. Below is a transcript of the call.

BILL HOFHEIMER: Thank you for joining us on today's call. It's fitting we're here on the first day of the regular season to make an exciting announcement between ESPN and the NFL. We have , president of ESPN and ABC Sports and co-chairman of Disney Media Networks, and NFL commissioner Roger Goodell. Commissioner Goodell, if you'd like to go ahead.

COMMISSIONER GOODELL: It's obviously a great day for the NFL. I'm up in Green Bay for our kickoff game this evening. We've been working over the last several months with our partners at ESPN and excited to be able to announce the extension of our agreement with ESPN to continue their great coverage of Monday Night Football and the NFL. You all have the release, so I won't get into the details. But I think the most important thing for the NFL is that not only are we continuing this great partnership but we are working together to bring more football to more fans and on more platforms. We're proud of our relationship with ESPN. They do a fantastic job of presenting the NFL and we're grateful to Bob Iger and George Bodenheimer for their leadership and we look forward to continuing this great partnership.

GEORGE BODENHEIMER: I'd like to thank all of you for being with us this morning and I want to also obviously thank Roger Goodell and the NFL for three decades of strong partnership. We're thrilled to be able to continue that partnership well into another decade. This agreement that we're announcing today will fuel ESPN on a year-round basis because it touches all corners of our company and supports our best available screen strategy with NFL content on TV, online and on mobile devices. Monday Night Football as you know is a top-10 TV property and wins every Monday night in all the key male demos and many nights in overall viewers, which is a remarkable achievement for the league and ESPN. Our core business is strengthened considerably with up to 500 new hours of NFL-branded content that will touch 35 different shows, ESPN programs, again on a year-round basis across all of our platforms. While this deal ostensibly begins in 2014, it has instant benefits for us right now. We do not have to wait for 2014 for this deal to start to benefit our company. For example, NFL Live expands to one hour at 4 p.m. eastern today and Monday night fans will be able to watch the game, Monday Night Football, on their iPads for the very first time. So we're very excited about the achievements in this agreement and the ability to continue to fuel our business going forward. Again, thank you for being with us today. Roger and I look forward to taking your questions.

Q. George, the deal involves no playoff games at first, but lots of digital and highlight rights. What does that say about how ESPN values digital and highlight rights versus a live playoff game and would you want to become part of the Super Bowl rotation?

GEORGE BODENHEIMER: I mean, overall obviously in our point of view this is a great deal for our company. As you're pointing out, the scope of digital rights we have, the length, the international expansion that we have developed here, it really fuels our company 24/7. This deal drives all of that. So I'm very excited about the opportunity to continue to expand our digital properties. Monday Night Football is obviously a TV icon and draws substantial viewership every Monday night. So we're very thrilled with the deal as it's constructed and I know it's going to be a very good deal for ESPN. As far as your last question, we're always looking to improve our product. I never say 'never'. I've been at this company over 30 years and everything has come a long way in terms of the product that's on the air. I look forward to be able to continue to improve that in the years ahead.

Q. George, you sort of alluded to this earlier. In terms of why make the deal now instead of closer to the time it was going to expire after 2013. Was it to get this additional programming and highlights online as quickly as possible? Why do it now instead of two or three years from now?

GEORGE BODENHEIMER: To us, our lifeblood is our programming agreements and content we have. Anytime we have an opportunity to extend an agreement like a preeminent property like NFL and Monday Night Football, you take advantage of that. Our company is always moving and growing. Whenever we can acquire new rights, we're able to exploit them, such as Monday Night Football on the iPad, which will be a great fan favorite going forward. Again, taking advantage of renewing an agreement like this when you can and it funnels right into the ESPN company which is always expanding. The whole authentication business that you're all writing about which enables cable and satellite subscribers to enjoy product on iPads and tablets, it's happening right now, and ESPN is leading the way. This contract is going to help us to continue to lead the way doing that.

Q. In addition to all of the digital highlight packages, other content, what else is there that's different about this deal that the last deal didn't have that had you do it right away?

GEORGE BODENHEIMER: I think the most tangible answer to that is the 500 new hours of programming that is enabled by this agreement right now, again, starting today. I mean, ESPN is a unique business in the media business. This contract will touch 35 different shows across all mediums starting later today, this afternoon. I would say that's the most tangible benefit to it. Additionally it enhances international rights that we have. ESPN is a global business and this helps grow our entire footprint around the world.

Q. George, I'm wondering if you could speak both about this deal and more broadly how you view the ever-rising cost of sports rights, the NFL above all, but across your portfolio with the somewhat slower growth that you're seeing in domestic affiliate fees and advertising revenues especially with a recession on the horizon?

GEORGE BODENHEIMER: First off, we pay for the value for what we get in these contracts. There's so much value for us in this contract, obviously we feel it's an incredibly good deal for our company. As far as the impact of this deal itself, there will be no NFL surcharge assessed on any distributors as a result of this contract. Our affiliate fees are already well- established in the marketplace. In that regard, we can digest this contract and begin on and continue to increase the value that we provide to the fans out there subscribing in both cable and satellite. ESPN has been the most valuable service in cable television literally for 30 years, every time a poll is taken. A product like this will only continue to enhance this and enhance the whole value proposition to cable. So I think it's a winner on all those fronts.

Q. George, could you clarify for me, will ESPN eventually get playoff rights? I want to be clear about your answer on the Super Bowl as well. What additional programming do you see and will there be an opportunity to simulcast post-season on ABC?

GEORGE BODENHEIMER: Well, as you can read in the release, there is an opportunity for a Wild Card game. It's the NFL's option, so it would be more appropriate for Roger to address that particular question. But there is a path to it in the agreement that we have reached.

COMMISSIONER GOODELL: We have in the agreement, which spans an eight-year extension, so our agreement is over 10 years now going forward, the option to put a Wild Card game on ESPN. We'll continue to talk with them about that and make the best decision for our fans, the NFL and ESPN. I think one of the great things about our relationship with ESPN is that we have been true partners and tried to find ways to expand our relationship and improve our relationship. I think that's been great for ESPN viewers and NFL fans. We've been able to do some important things to promote the game and expand our business opportunities. This is just one opportunity that we do have in the context of this agreement.

Q. Roger, obviously the first Monday we have two games. Is that something we might see more of in the future?

COMMISSIONER GOODELL: No, I don't anticipate that. We have that on the opening weekend, one to celebrate the kickoff of the season, but two to avoid having a Monday Night Football game on the last weekend of the regular season going into playoffs, which creates all kinds of competitive issues. I don't see us expanding the doubleheader series.

Q. George, I wanted to clarify. At no point as you renew your affiliate deals will there ever be an additional charge for the NFL?

GEORGE BODENHEIMER: Correct.

Q. Never, really, okay. You don't intend to roll back, so I wonder as you go forward, will there be charges assessed for other programs you've added over the past year or so?

GEORGE BODENHEIMER: No. There is no portion of any of our fee that is associated with any one piece of product. The fee that we ask of our affiliates is based on the overall value of the ESPN service.

Q. I understand there's not a specific surcharge that you're talking about being linked to this deal. ESPN has been fairly aggressive in pushing back against the notion of cord cutting, that people are dropping their cable. I wondered, one, what you think this does in terms of the value of cable in terms of people watching live, and two, if somehow this expense has to be passed back to somebody, doesn't it?

GEORGE BODENHEIMER: Again, our overall networks, our overall business, is greatly enhanced by our affiliation with the NFL. This further enhances that affiliation. So the value of ESPN networks continues to grow, again, fueled significantly by our affiliation with the NFL. As far as the cord-cutting topic, as we've said repeatedly over the last year, we don't see any evidence that any slowdown in subscriber growth is related to people cutting their cords because they can see the same product elsewhere. We see it more as the economic conditions in the United States, not some transition to a new customer who is looking for everything for free. We don't believe cord cutting is resulting from anything currently going on in the business today.

Q. Obviously you've spoken about your lucrative subscriber fees. This deal comes with a bump in rights fees. Does it change your calculation in terms of the Thursday night package that networks will begin to bid on soon?

GEORGE BODENHEIMER: It probably is appropriate for Roger to answer the question. But from my perspective, as Roger said a moment ago, we have an excellent relationship with the NFL and we're always talking about lots of things. It's not like we sign a contract and then see you seven years later. We're always talking. If there's an opportunity at any time to expand or enhance what we're doing, we obviously speak to one another.

COMMISSIONER GOODELL: I guess from the NFL perspective, we are dealing with our current packages and our current rights holders. We obviously are evaluating the possibility of an expanded Thursday night package and we will talk about all of our current partners as well as potential partners on that.

Q. Roger, what is the significance of reaching this agreement at this time where there has been some economic slippage? Things may not be as grim as they might be in the next year. And, George, I don't know if this will enable you to go back to your affiliates to renegotiate some fees and will it affect the college network that you have here in the state of Texas.

COMMISSIONER GOODELL: I wasn't sure what the question was. I think you mentioned the economy and the impact it's having on the NFL?

Q. Just the significance of being able to do this now when the economy perhaps has not gotten as bad as it might be as the months progress. The significance of getting this done now.

COMMISSIONER GOODELL: I can't project where the economy is going. But I do know obviously that our fans are being impacted by the economy, our partners are being impacted by the economy. I think at times like this you work more closely with your partners and your fans to make sure you're being responsive. I think the view that both ESPN and the NFL take is a long-term view, which is how do we continue to expand our joint involvement with Monday Night Football and beyond Monday Night Football. I think the features of this agreement go to expanding our platforms, expanding programming opportunities, which are all good for consumers and fans. ESPN is so widely distributed, it's great for our fans to be able to experience more football. I think that's great for them.

Clearly the long-term nature of this I think to some extent is a result of not only a successful partnership between the NFL and ESPN but also the ability of us to reach a long-term agreement with our players, which will be beneficial to the players and to the league and, again, to our overall fan base.

GEORGE BODENHEIMER: From my perspective, I mean, this agreement enhances our value to our affiliates through our 'Watch ESPN' app, which has been downloaded nearly three million times since it was launched earlier this year. It's enhances the value of a cable subscription, allowing people to enjoy NFL and Monday Night Football on their iPads and tablets, for example. I think it's only going to enhance our relationships with our affiliates, which are already in very good shape as we deliver the most value to them. On the last piece of your question, it will have no impact on our dealings.

Q. George, have you had conversations with your distribution partners about this new deal and what has been their reaction? GEORGE BODENHEIMER: Well, it's been a busy morning so far. Since we just announced it an hour or so ago, I haven't had a chance to talk to any of them yet. But I'm sure that I will as I'm in frequent contact with the major distributors. But all kidding aside, ESPN delivers for cable operators. It's the most valuable service. Nobody disputes that. We work as hard as we can to create new products like Watch ESPN to benefit their business and to continue to help the business grow. So this will be received very well by our distributors. Certainly the length of the term, another eight years into 2021, provides benefits on both side. We can all plan our businesses, you know what product you have. We like long-term deals. We appreciate the NFL's willingness to go eight years. It's our second eight-year deal in a row and I think that's another value add to the whole distribution business.

Q. Roger, regarding your evaluating the possibility of an added Thursday night package, what would you say your timetable is on awarding such a package?

COMMISSIONER GOODELL: It's not likely that we would do it in the next year. We're going to continue our discussions with our current partners and evaluate aspects of our new labor agreement as part of that, make what we expect to be the best decision for our fans and for our 32 clubs, for our partners.

Q. George, obviously you've had some very good games over the course of this contract. That being said, NBC consistently has had a higher volume of games matching two teams with winning records in the previous year than your schedule has had. That's one reason why they've called their package the marquee prime time package. Have you ever asked for a more consistently good schedule on NBC's level?

GEORGE BODENHEIMER: We work closely with the league on scheduling the games. Our schedule this year is dynamite. We work with the league constantly on scheduling games, and they're very cooperative in working with us to schedule games that are important to us. Again, the overall scope of this deal goes so far beyond what individual matchups we have over 17 games, it's really about the scope of this deal for our company, and it drives the whole nature of our company. It's really where we elicit the value. I appreciate the constant comparisons to this game, that game, that network, this network, who has a marketing slogan. It really is driving the entire value chain for the ESPN company. That being said, Monday Night Football itself remains a top 10 TV property and wins every single Monday night in the key male demos. It's a win-win. The night is great for us. It's must-see programing for millions of sports fans and it fuels the ESPN company worldwide. It really hits for us on all levels.

COMMISSIONER GOODELL: I would jump in behind George on this one that together, both with scheduling, with the credible resources, coverage that ESPN brings to our sports fans and NFL fans, that we've been able to continue to grow the audience of Monday Night Football. They've taken a great brand and made it better. That's a tribute to them. I think we've worked well together to make sure all of our packages continue to grow across all of our partners. They've each done a terrific job in doing that. So I agree with George. They've had unprecedented success with what they've done with Monday Night Football on ESPN and we expect to continue to grow that together.

Q. Commissioner, I was wondering in terms of the playoff game, is there a timeframe for when that might occur and would it come at the expense of the current format or would ESPN get another game in an expanded-playoff format?

COMMISSIONER GOODELL: Both remain options. We have commitments for our playoff format through 2013. I don't anticipate any changes prior to that. But both options are possibilities for us as we consider not only our broadcast partnerships but also whether we would at any point in time consider expanding the playoffs, which we have done from time to time as a league.

Q. Do you have an update on where you stand with renewal talks with your other television partners?

COMMISSIONER GOODELL: We are in discussions. As you know, we had an exclusive negotiating period with ESPN, obviously successfully reaching a conclusion. We're thrilled with that. We are in discussions with our other broadcast partners as we speak.

Q. Any thoughts about whether you'll be looking for similar level of price increases as you got from ESPN?

COMMISSIONER GOODELL: We'll keep our negotiations with our broadcast partners.

Q. From ESPN's point, you bid on the Olympics, would you still be able to pay the money to the NFL and work with them if you had gotten the Olympics?

GEORGE BODENHEIMER: The Olympics negotiation, whether we had won it or not, would have had no impact on our dealings with the NFL.

Q. This gives you a nice plum, if you didn't get that, since you got NFL, a nice worldwide broadcasting plum there.

GEORGE BODENHEIMER: As I've been saying consistently here, it's a premiere property. The whole NFL relationship fuels the entire ESPN company. Calling it a 'plum' is a bit of an understatement. But we're very happy with the deal we reached and to extend our relationship into the third decade with the NFL.

-- 30 –