John Skipper spoke at a University of Central Florida graduation ceremony this year and told the crowd about a study that found the average person spends three hours a day in front of a television, an hour on social media and just 19 minutes reading.
“Please watch a little less television,” the president of ESPN said. “Maybe post a few less comments about the lunch you had today.”
On the surface, it was odd advice from one of the most powerful individuals in television who runs what may be the most digitally savvy news organization in the world. But no one who knows Skipper would be surprised. His background is in publishing, his undergraduate degree in English literature, and in graduate school he studied 18th-century satire. His post-graduation ambition was to write the Great American Novel.
“He always has a book with him,” says NBA Commissioner Adam Silver. “He’s the guy when you met him for lunch and everybody else has their head down in their smartphone, he’s the one reading a book.”
So here is Skipper, the 60-year-old protagonist in a winding narrative that suddenly has an unpredictable ending. As the media landscape shifts, Skipper must steer ESPN through what may be the most challenging period the mighty sports network has seen since it was launched 37 years ago next week.
Skipper has held ESPN’s top post since 2012, and his fingerprints are all over the network. Its prolific daily output matches his interests and ambitions, from ramped up soccer coverage, heavy investments in television rights for professional and college sports, and an emphasis on digital journalism and longform storytelling. He had an early hand in building ESPN.com, helped start ESPN The Magazine and green-lit the now-shuttered Grantland site and acclaimed “30 for 30” documentary series. He was the driving force behind the recent launch of The Undefeated, a website exploring the cross-section of race, culture and sports.
But the business model upon which ESPN was built may be going away. Millennials especially are deciding they don’t need cable and are instead turning to on-demand services and buying their programming a la carte. ESPN’s subscription numbers are dropping, a trend that is costing Disney, its parent company, hundreds of millions of dollars.
“The whole industry is struggling with the right answer,” said Rich Greenfield, a media analyst with BTIG Research. “We have all these people growing up and deciding they don’t need to spend the money. The tide is going out on the whole sector.”
The problem may be more pronounced for ESPN, which has made more money off subscription rates than any other network. ESPN has always been a reliable, enviable earner in the Walt Disney universe. Last August, the network disclosed it had lost 7 million subscribers over the previous two years, and investors panicked, triggering a $22 billion selloff in Disney stock. The subscription drain has continued, and the total is now below 90 million for the first time in a decade.
Skipper prefers to operate in the background. He was not made available for this story, and many of his ESPN colleagues interviewed requested anonymity because they had not been authorized to discuss the network’s boss.
For the past year, ESPN has tried to paint the picture that subscription losses were anticipated, a mere nick in its long-term plans. The network’s argument being that the digital revolution has come in waves and ESPN has consistently adapted — particularly in jumping to web in the 1990s, distancing itself from other sports media brands and transitioning to mobile.
“We have a very good hand to play in navigating the future,” Skipper says.
Skipper was wrapping up graduate school, and Rolling Stone was the coolest place in publishing to work. He started there as a secretary and enjoyed a meteoric rise. Skipper never wrote the Great American Novel, but he quickly became a star in the publishing world.
“He was this gangly, southern hippie from North Carolina,” recalled Kent Brownridge, the senior vice president and general manager for Wenner Media, which owns Rolling Stone. “He was a little bit shy, but he was obviously very smart — uncommonly smart.”
Jann Wenner, the longtime Rolling Stone publisher, described a well-liked, well-connected, social boss in the 2011 ESPN oral history “Those Guys Have All the Fun”: “He was fun to be with, he would sometimes smoke pot with me, and he’s got that wry sense of humor, and that devotion to music.”
After eight years, Skipper moved over to serve as publisher of another Wenner publication, US, which is now called Us Weekly. He proved to be a personable boss but didn’t always manage up very well, Brownridge says. Wenner at times would call his office, leave messages and never hear back.
“He pissed Jann off, and Jann made me fire him,” Brownridge said. “Then Jann decided that he’d made a mistake and said, ‘Why don’t you hire him back?’ I said, ‘I don’t think he’ll come back.’ ”
Skipper instead went to SPIN magazine, becoming president of the Rolling Stone competitor, before eventually joining Disney’s publications arm. He quickly planted a seed with ESPN bosses that they needed a respectable magazine of their own, and in 1997 Skipper became senior vice president in charge of ESPN The Magazine, where he borrowed heavily from his Rolling Stone days, adopting a bi-weekly model, an oversized product and edgy design and feel.
His responsibilities at ESPN grew rapidly, and since becoming head of content in 2005, Skipper has played a huge role in growing ESPN into what it is today — as a brand, a TV network and a media behemoth with tentacles that stretch into every corner of the sports world. Despite what some detractors might suggest, the successes outnumber the failures. And in some cases, the failures were spun into successes.
The ESPN phone was a Skipper project that launched in 2005 and barely lasted six months. But ESPN loyalists quickly point out that Skipper had correctly identified the company needed to be in the mobile business because that was the future. They continued efforts to make their mobile site user-friendly and a vital hub for instant highlights, scores and news. Today ESPN sees around 50 million mobile users in a month, last year surpassing its desktop platforms.
Most recent estimates have cable providers paying $6 a month to carry ESPN — about four times higher than the next-highest cable network — and that cost is expected to top $8 in 2018. With ESPN’s stable of networks serving as a cornerstone of packages, subscription numbers rose steadily for more than two decades — until viewers began exploring other ways to watch and pay for television and the dam broke.
The losses have the entire broadcast industry scrambling.
“I do not pretend to have predicted it exactly,” Skipper said recently, “but I think we understood generally what was happening.”
If that’s true, the network was still rendered largely helpless. Disney revealed last year that its number of subscribers had fallen from 99 million to 92 million. Losing 7 million subscribers at $6 per month is a revenue loss in the neighborhood of $500 million annually. And worse, there’s no evidence that the bleeding is close to stopping. While ESPN is exploring an over-the-top, direct-to-consumer streaming service, it has yet to announce any firm plans.
Skipper’s boss at Disney, Bob Iger, the company’s CEO, is a former TV executive with ABC. He acknowledged the challenges ESPN faces in an interview last month with the Hollywood Reporter, while still expressing optimism for the company’s ability to navigate the turbulence.
“ESPN is not broken at all,” he said. “ESPN, like a lot of other media entities, is facing challenges that they haven’t faced before that are due to some very obvious circumstances, which is technology’s effect on media on the creative side, the distribution side and the consumption side.”
What hasn’t changed: For those who love sports, ESPN is as relevant as ever. The ratings, page views and mobile numbers all suggest ESPN still enjoys a devoted following; it simply isn’t collecting as much money from an audience that never tunes in.
“ESPN is just as dominant within the industry today as it was five years ago,” said Neal Pilson, the former president of CBS Sports. “The incursions continue to be just little nicks and chips.”
ESPN is more vital than ever to the sports fan, Pilson says, because the network has locked up rights to televise so many sporting events, having entered into long-term agreements with: Major League Baseball, the NBA, the WNBA, the College Football Playoff, the U.S. Open tennis tournament, a host of major college conferences — the ACC, Big 12, Big 10, Southeastern Conference, American Athletic Conference and Mountain West — as well as the Rose, Sugar and Orange Bowls.
Those deals also mean ESPN has billions of dollars committed for years to come and needs to find revenue not only to pay for those contracts but to make up for what the company is losing from shrinking subscription numbers.
“The domestic subscriber revenue is only growing 3 percent, but the costs are growing well north of that,” Greenfield said. “So you have a problem. And the question for Skipper is: They’ve locked in sports rights for so long, how do you grow from here?”
ESPN executives offer a different interpretation. Those fixed costs aren’t the problem, they contend; they’re actually the solution.
When NBC first lost the NBA rights in 2002, Dick Ebersol, the network’s longtime sports president, issued a statement saying: “The definition of winning has become distorted. If winning the rights to a property brings with it hundreds of millions of dollars in losses, what have you won?”
NBC offered $325 million a year back then and was outbid by ESPN by about $75 million. A dozen years later, the NBA is still in business with ESPN and the network is expected to pay the league $1.4 billion annually through the 2024-25 season, according to the Sports Business Journal.
Skipper and Silver have played key roles in negotiating the past two contracts between the entities. Most of the discussions take place in New York, either the ESPN/ABC offices on the Upper West Side or the league office in midtown.
“He never bluffs,” Silver said. “He’s always direct, always tells you what he’s thinking. If he’s willing to pay you 10, he’ll pay you 10. He doesn’t tell you 8 and then grind it out until you get to 10.”
Silver was head of NBA Entertainment when Skipper oversaw ESPN.com, so they both had a vested interest in the digital side of the contract, and Silver says Skipper was adamant that the deal extend beyond traditional television broadcasts.
“He wanted to ensure they had unfettered rights in multiple platforms,” Silver said. “John understood while the bulk of value was going to come through the standard linear telecast, the way they were going to build additional value was through these emerging platforms. John saw the young, multi-cultural NBA audience was particularly suited to these platforms that ESPN was developing.”
This is the main area where ESPN has said it can generate additional revenue and close the gap created by subscription losses.
“We have a long history of programming-cost increases and increasing our revenues to absorb those costs,” Skipper said at a conference called Code/Media in Dana Point, Calif., earlier this year. “It’s a very simple matter: We have to grow revenue faster than these expenses grow.”
He cited the NBA as an example of a heavy cost taken on and an example of the network flexing all of its muscles at once. He pointed to a February regular season game between Golden State and Oklahoma City. According to Skipper, 3.2 million watched on television, 320,000 tuned in via WatchESPN — an online service — another 850,000 followed a simulated gamecast online, 450,000 accessed highlights and 200,000 consumed some form of alert or live updates during the game. Skipper counts the total audience as 5 million.
So rather than tell advertisers about the 3.2 million who watched the live broadcast on ESPN, the network touts the total number of impressions and the broader reach across all of its platforms.
“We increased our TV audience by 36 percent . . . and we charged for all of that,” he said.
This is why he views TV rights as an investment. The trick is finding a way to peddle the same thing across a variety of platforms. While it pays to broadcast all of these games on television, Skipper says ESPN brings in nearly $500 million in digital-specific revenue.
Disney’s most recent quarterly report, released earlier this month, showed that even though subscription numbers continue to decline, the company’s cable network revenue showed modest growth, attributable to higher advertising revenue during a period that included the NBA playoffs.
ESPN’s rights have gone up by nearly $2 billion in the past three years alone. The network’s current commitments total an estimated $4.75 billion annually, a figure expected to leap by $1 billion in the next couple of years.
“We think those rights are the greatest assets we have, which allows us to navigate any environment,” Skipper explained at the conference. “We are going to be able to use those rights to continue to launch new businesses, create new platforms, new content and continue to grow.”
Bob Bowman, who heads MLB’s advanced media unit, spoke at the same event and said ESPN is burdened by its own success, and “it’s hard to imagine anyone’s betting against ESPN.”
“How they get from here to there, it’s going to be fascinating,” Bowman said. “They’re going to get there. There’s no question that ESPN is going to be successful.”
They will be — but only if Skipper is successful.
The head of a giant media company wears many hats. Skipper took over ESPN’s top job and was already fluent in advertising, but it was the distribution side that he studied with fervor. Colleagues describe a relentless worker who’s up every day at 4 a.m. to exercise and doesn’t go to bed until he has responded to every email in his inbox.
In meetings, he listens and asks questions, but usually in an understated way.
“He’ll go to a meeting where he’s deciding on some key jobs and key appointments coming up in the next couple years, and he’ll put together all the potential candidates,” said one executive. “Everybody’s complaining that there’s 19 people in this meeting, and they had no clue John was assessing what they were contributing, their curiosity level, how they could demonstrate their creativity.”
From time to time, the Southern charm has taken a backseat, and Skipper has revealed himself to be hard-nosed, unflinching and pragmatic when needed. Bill Simmons was among ESPN’s biggest stars and had a direct line to Skipper for several years, heading up the Grantland site. It was a friendship as much as a working relationship, according to those familiar with the situation. But when Simmons tested Skipper one too many times by attacking NFL Commissioner Roger Goodell, Skipper made the decision to part ways. He let Simmons find out through the media.
“This is not personal,” Skipper told the New York Times last year. “It’s business.” Simmons is now with HBO.
Regardless of area or person, those who have worked on both sides of the table with Skipper say there’s no escaping his unconventional background. He runs a giant television network, but that’s not always the focal point of discussions.
In recent years, a handful of ESPN executives and on-air personalities have made a weekend trip to Oxford, Miss., where Wright Thompson, a senior writer for ESPN The Magazine, would entertain and take the group to an Ole Miss football game. Recent visitors have included Nate Silver, founder of the Disney-owned political website FiveThirtyEight; Chris Connelly, the veteran journalist who took over Simmons’s Grantland; and Skipper, among others.
At one such weekend, Skipper and company attended a party at Rowan Oak, the famous compound of William Faulkner. They toured the area, talked American literature, consumed a few drinks and then consumed a few more.
The group moved on to Oxford Memorial Cemetery, barely a mile away, for a visit to Faulkner’s grave. The old English major was enthralled, and the group sat on short cement walls, passed around bottles and talked as the wind rattled the acorns out of the surrounding oak trees. “High-level conversations about American literature, Faulkner’s place in it, the influence of alcohol and race and all the sophisticated conversations you would have at midnight under the circumstances,” said one late-night attendee.
A police car pulled up. The group became quiet, unsure what would happen next. That’s when Skipper stood and approached the officers. No one heard what he said, but they were certain they were in trouble.
Skipper returned, the officers apparently mollified, and the evening continued.
“When we had a moment of crisis, he didn’t hesitate before taking the lead,” the ESPN employee said. “John wasted no time in taking the lead himself and striding purposefully down the hill in their direction.”