Bill Simmons’ ESPN And Tech Takes Prove He’s Clueless
And given that The Ringer isn't doing so hot since he left ESPN, maybe he's not the one to throw stones
Fresh off his new deal to move the Ringer from Medium to Vox, Bill Simmons gave an interview at the Code Conference about his site and the future of sports media. He had some pointed criticism for his former employer, ESPN, which is coming off a round of layoffs that saw many of the company’s highest profile personalities get a pink slip.
Simmons has been publicly feuding with ESPN since he was fired (yes, fired) from the company in 2015, and it becomes clear over the course of the 11-minute interview that his comments are mostly motivated by sour grapes. But given the Ringer’s struggles and his comments about the tech industry, one thing is clear: he really has no clue what he’s talking about.
Take it away, Bill:
“They [ESPN] had to realize that they were a technology company,” he said. “They always thought of themselves as a broadcasting network. But where the world is going is you have to be a technology company, and the ones that are winning out are Facebook and Twitter and Amazon and Hulu — all these places. ESPN should have been in that mix. … I think they should have invested in a Silicon Valley office, I think that was their biggest mistake.”
Here’s the problem: ESPN is a broadcasting network, and decidedly not a technology company. One does not just become a technology company by declaring itself so, or by opening an office in Silicon Valley. The companies he mentions that are “winning out” that ESPN should “be in the mix” with are wildly different companies with entirely different core competencies, so this statement basically amounts to saying that ESPN should have, in addition to being a broadcasting network, become a social media platform, an e-commerce behemoth, and a standalone streaming service that offers TV and movies. Um, what?
Simmons’s sharpest criticism for ESPN is Disney’s investment in BAMTech. BAMTech is a spinoff of MLB Advanced Media that provides streaming technology to an array of clients, including HBO, the NHL, MLB, the WWE, and now Disney and ESPN. Disney, ESPN’s parent company, acquired a 33 percent stake in BAMTech for $1 billion in 2016, and has the option of becoming a majority owner over the next several years.
Simmons says that instead of Disney buying BAMTech for this exorbitant amount of money, ESPN should have just made its own BAMTech. But “making BAMTech” is as far outside of ESPN’s core competencies as building a rocket and landing on the moon, and BAMTech didn’t just come to be out of thin air. This criticism is as cheap as slamming IBM for not making the iPhone or saying an NBA team should have traded up to draft Michael Jordan.
BAMTech was born out of need for the MLB. With thousands of games not being broadcast on cable and international interest in the league growing with the influx of Japanese players such as Ichiro Suzuki, MLB launched MLB Advanced Media in 2000 as a way of developing distribution channels for content that otherwise wasn’t finding its way to baseball fans.Further, MLB is a privately held entity, meaning it is not beholden to shareholders for short-term gains every quarter like Disney is. MLB dumped millions into BAMTech over a decade before clients with similar needs started to line up, which required a level of patience and deep foresight that a publicly traded company is rarely afforded.
Simmons also seems to fundamentally misunderstand Disney’s minority acquisition of BAMTech, and mergers and acquisitions in general. Disney didn’t buy it so they’d have the technology to launch an ESPN streaming service. Disney bought it so everyone who needs a streaming service — HBO, the NHL, Discovery, etc. — will now be a paying client of… Disney! The return on investment for this acquisition is potentially much greater than what Disney would get by adding an ESPN streaming service.
Furthermore, ESPN has had the option of adding a standalone streaming service for years. It hasn’t because it doesn’t make business sense. The breakeven price point for ESPN OTT has been estimated at more than $35, which is much more than what polling suggests people are willing to pay for it. It also has the potential to cannibalize its cable business, which up until recently was the darling of the cable industry. ESPN’s ills are not cured by having a streaming channel.
The simple fact is ESPN’s problems are inherent to the space it occupies in the industry it’s in. Cable subscribers are plummeting because of cord cutting, and the cost to acquire the rights to air live sports is skyrocketing. There are legitimate criticisms of moves ESPN has made along the way — a lot of people think ESPN got hosed in contract negotiations for the rights to NBA, NASCAR, and college sports — but the company was screwed regardless because of market forces it had no control over. And the truth is ESPN and Disney have made incredibly shrewd moves to stave off the apocalypse that is now occurring, including repeatedly negotiating a higher affiliate fee — the amount cable companies pay ESPN per subscriber to include ESPN channels.
“I think it’s going to be Amazon, Netflix, Google, Facebook deciding everything, including what we’re wearing in like five years,” Simmons added. “They’ll buy the sports rights. Look at what Netflix did with stand-up comedy. They’re like, ‘Hey, we like stand-up comedy, we’re just buying it. We’re getting every single comedian.’ And they just did it. And eventually they’re just going to look at the NBA or the NFL and just be like ‘We’re buying it. We want everything. And that will be it and it will be over.”
Here’s the problem with that: it would be absolutely insane — business suicide even — for the NFL or NBA to give exclusive rights to its games to Amazon, Netflix, or Facebook. These leagues want to maximize the number of eyeballs that view their content, and there’s no indication that the major TV networks won’t provide that any time soon. While sports leagues have dabbled with Twitter, Yahoo, and Amazon et al., the prevailing wisdom of the moment is that the leagues have spread their content over too many channels, as CBS’s Shari Redstone stated at Code Conference the same day Simmons was interviewed.
Furthermore, the reason Netflix was able to “buy standup comedy” is because the producers of that content are highly fractured and cheap to fund. Standup comedy also doesn’t have any other better options, save maybe Comedy Central. Comparing the rights to air standup comedy to the rights to air professional sports is like comparing a grain of sand to the Himalayas.
“ESPN was kind of the middle man for a lot of ways for us,” Simmons said. “They weren’t doing the greatest job I don’t think selling the site especially the podcast network and it felt like it was a bigger business than it was and we clashed about it.”
This is a curious statement for Simmons to make for a number of reasons. First, comScore estimated that the Ringer attracted just 357,000 unique visitors in April, while Grantland was raking in 6 million per month, despite ESPN not “doing the greatest job” as his “middle man.” A lot of former ESPN personalities have gleefully left the company only to find their ratings crater without the weight of ESPN’s brand behind them (looking at you, Skip Bayless).
And Simmons’s own business decisions have been highly suspect. Putting the Ringer on Medium was simply idiotic; Medium didn’t have a business model to sustain even itself, much less other publications, and that was obvious to everyone. Simmons has also been criticized for overstaffing too quickly. His belief that “good content” will find its audience on its own is naive at best; aside from the Ringer’s podcasts — which in fairness do quite well — none of the brand’s content has performed on par with investment, despite it employing some of the best writers around. Perhaps CNBC’s Eric Jackson put it best in his writeup of the Ringer’s “second chance” with Vox.
“However, if The Ringer is really going to achieve its full potential and make the most of this second chance with the help of Vox Media, it’s important that Simmons and his president, Eric Weinberger, really look in the mirror. Neither one of them has shown himself to be adept at running this business to date …”
He who casts the first stone, Bill …