SUN VALLEY (California), July 10 — The rising cost of sports programming will be a major topic of discussion this year at Allen & Co.’s annual gathering of dealmakers in Sun Valley, said John Skipper, president of Walt Disney Co.’s ESPN.
This year’s conference includes team owners, agents and league commissioners, Skipper said today as he arrived at the mountain resort in Idaho. This week’s event marks the second year of attendance for Skipper, whose ESPN sports-cable network is Disney’s most profitable operation.
“It speaks to the ascendance of sports as valuable media entity and sort of central to the culture,” Skipper said of the many sports attendees at conference, held for 30 years by the New York-based investment bank.
Other sports figures invited this year include Chicago Bulls and Chicago White Socks owner Jerry Reinsdorf, National Basketball Association Commissioner David Stern and sports agent Casey Wasserman.
ESPN tries to reduce sports programming costs “in every negotiation we do,” Skipper said. Ultimately, it’s up to media networks to determine the price.
“They’re worth what somebody will pay for them,” Skipper said. “It’s up to us. We can choose not to buy the rights.”
The rising value of sports was on display in January when Time Warner Cable Inc. agreed to pay more than US$7 billion (RM21 billion) to broadcast Los Angeles Dodgers games for 25 years, starting with the 2014 baseball season. Rupert Murdoch’s 21st Century Fox Inc., which plans to start cable network Fox Sports 1 next month to rival Disney’s ESPN, last year purchased a 49 per cent stake in the New York Yankees’ Yes Network, giving the channel a US$3 billion valuation.
Margin pressure
Goldman Sachs Group Inc. downgraded Disney’s stock to neutral from buy on June 20 and removed it from its “conviction buy” list because of new competition and the rising cost of sports rights. Cable-network margins are likely to compress and operating income growth will slow to 4 per cent in fiscal 2015 from 12 per cent this year, Goldman analyst Drew Borst estimated.
Disney, based in Burbank, California, rose 0.4 per cent to US64.94 today in New York. The shares reached an all-time closing high of US$67.67. on May 15.
Skipper said ratings for the men’s final at the Wimbledon tennis tournament were down compared with last year because the matchup between the winner, Andy Murray, and runner-up Novak Djokovic, wasn’t as compelling to viewers as last year’s pairing of Murray against Roger Federer.
“They’re not as sexy,” Skipper said of Djokovic and Murray. — Bloomberg
