By Joe Flint
ESPN on Monday announced the surprise resignation of network
President John Skipper over substance-abuse issues, creating
uncertainty at a critical moment for the sports TV juggernaut and
its majority-owner, Walt Disney Co.
George Bodenheimer, Mr. Skipper's predecessor as head of ESPN,
will return to the company as acting chairman for three months
while a search for a permanent successor is competed.
"I have struggled for many years with a substance addiction. I
have decided that the most important thing I can do right now is to
take care of my problem," Mr. Skipper said in a statement. "I have
disclosed that decision to the company, and we mutually agreed that
it was appropriate that I resign."
Mr. Skipper's sudden departure creates a challenge for Disney
Chief Executive Robert Iger just a few days after the entertainment
giant announced a $52.4 billion deal to acquire assets from 21st
Century Fox, including 22 regional sports networks that Mr. Skipper
would have been responsible for integrating into ESPN.
Without Mr. Skipper, the already difficult task of remaking ESPN
for the digital era could be even more arduous. The network is
trying to recalibrate its long-profitable TV business for a media
environment in which more consumers are cutting back on cable-TV
subscriptions and turning to streaming services.
The network's next leader will be responsible for launching a
new streaming service this spring called ESPN Plus, which will air
sporting events that don't appear on the cable-TV network,
including baseball and hockey games. And the new president will
inherit a workforce that is uneasy after several rounds of
layoffs.
"It's a big deal," said sports-industry consultant Marc Ganis of
Mr. Skipper's exit. "John has been a major part of the planning for
Disney's digital initiative and streaming services, while at the
same time dealing with cord-cutting and cost-cutting as well as
ESPN's role in society as a journalistic entity."
Mr. Skipper's situation caught his superiors off guard, a person
familiar with the situation said. Just last month he signed a
contract extension that was to have run through 2021, and last week
he ran a day-long gathering of ESPN's on-air talent at the unit's
headquarters in Bristol, Conn.
Mr. Iger said in a statement that he wished Mr. Skipper well
"during this challenging time."
Mr. Skipper, who was also co-chairman of the Disney Media
Networks unit, is the second prominent Disney executive in recent
weeks to be sidelined by personal issues. Last month, John
Lasseter, creative chief of Disney's animation units, took a
six-month leave of absence after apologizing for inappropriate
behavior with staffers. Messrs. Skipper and Lasseter have been
considered to be two of Disney's most important creative
executives.
Internally at ESPN, the two executives seen as candidates to
succeed Mr. Skipper are Justin Connolly, who oversees distribution
and marketing for ESPN, and Connor Schell, who is in charge of
content for ESPN's platforms.
Mr. Skipper, who turns 62 on Tuesday, joined ESPN in 1997 as a
senior vice president and general manager of ESPN The Magazine,
after earlier stints at Rolling Stone and Spin. He rose through the
ranks on the editorial side. He became president of ESPN in
2012.
The past several years have proved challenging for ESPN. It has
been particularly hard hit by cable and satellite subscribers
cutting the cord to their pay-TV services or trading down to
slimmer packages. Mr. Skipper on many occasions has nevertheless
pointed out the risks of ESPN moving too quickly away from its
traditional business.
"We are still engaged in the most successful business model in
the history of media, and see no reason to abandon it," he told The
Wall Street Journal last year.
ESPN currently has just over 87 million subscribers, a drop of
13 million from six years ago, according to Nielsen. Subscriptions
are ESPN's main revenue driver. Its flagship channel costs pay-TV
distributors $8 a month per subscriber, the most of any network,
according to SNL Kagan, an industry research firm.
ESPN continued to lose subscribers in the quarter ended Sept.
30. While price increases helped lift subscription revenue, ad
revenue declined and programming costs grew, contributing to a 1%
decline in operating income at Disney's cable-TV unit, which also
includes Disney's entertainment channels.
In response to its issues, ESPN has been cutting staff. Last
month, ESPN laid off 150 employees, mostly in studio production
technology and digital content. Earlier this year, it cut 100
employees, including some well-known members of its on-air roster.
ESPN employs approximately 8,000 people.
Besides having to confront a changing media landscape, Mr.
Skipper had his fair share of controversies on the editorial side.
Most recently, "SportsCenter" host Jemele Hill was suspended for
violating the network's social-media policy because of comments she
made on Twitter regarding NFL players' national-anthem protests.
Ms. Hill was among many ESPN employees who publicly expressed
thanks to the executive upon his departure.
In October, Mr. Skipper backtracked from a programming agreement
ESPN struck with Barstool Sports, a website whose president had
previously made sexist statements about an ESPN host. The Barstool
experiment ended after one episode.
The return of Mr. Bodenheimer, who retired in May of 2014 after
33 years at ESPN and is well-versed in its operations, will give
Disney some breathing room in naming a successor to Mr.
Skipper.
The 59-year-old took a different path to the top of ESPN,
starting as a driver in the company's mailroom in 1981, just two
years after the network launched. A low-key executive, he climbed
the ladder on the business side and played an important part in
orchestrating ESPN's rise from a single channel to a global
powerhouse. Mr. Bodenheimer focused much of his efforts building
ESPN's distribution.
--Ben Fritz contributed to this article.
Write to Joe Flint at joe.flint@wsj.com
(END) Dow Jones Newswires
December 18, 2017 19:15 ET (00:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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