You needed ESP to know ESPN would click

The Boston Globe
September 9, 1994, Friday, City Edition

You needed ESP to know ESPN would click;
SPORTVIEW / JACK CRAIG

ESPN observed its 15th anniversary Wednesday night by making viewers laugh at old on-air bloopers and also tingle with taped highlights going back to 1979, some plucked from the networks.

But ESPN left out the best part of its story - its birth, growth, near death and finally success that has made it an American institution.

The idea for ESPN was conceived in 1978 by three Connecticut men, each of whom borrowed $ 3,000 on his credit card to get the project started. Bill Rasmussen, his son Scott and Ed Eagen used the $ 9,000 as a down payment to rent a spot on one of the six satellites RCA had put into the sky.
Their goal was limited: to spread University of Connecticut sports around the state via cable. That telecasts also would be seen in a few more homes nationally was incidental. ESPN began airing six hours nightly and much of the weekend. With very little and often no rights revenue, it sometimes covered slow-pitch softball, volleyball and even lesser events. If you played a game in the Bristol area, ESPN might televise it.

"We had a deal where, exactly three months after our first telecast, we would make monthly rental payments to RCA of $ 34,167 for the satellite," said the elder Rasmussen yesterday from his home in Naples, Fla. Not by accident, the first event, a UConn basketball and soccer twin bill, was televised on Nov. 1, 1978, pushing back the first big payment due to Feb. 1. Meanwhile, there was no significant advertising revenue coming in.

Despite their dilemma, Eagen and the Rasmussens were encouraged when the Wall Street Journal ran a story about how opportunities for nationwide distribution were being lost in that the other five RCA satellite spots were not being utilized. "After the story ran, they were quickly bought up by Disney, Time and that type," Rasmussen said. "We knew then we had something of value. We decided that the fact we had no money would not inhibit us."

The ESPN founders gave their concept to a venture capitalist, who found Getty Oil and Stu Evey, an oil executive enthused about taking charge of a sports operation and probably televising golf, his true love.

Getty's money flowed like oil. Soon ESPN had 58 cameras plus slow-motion machines and state-of-the-art equipment purchased in Japan. It might have been covering softball, but ESPN was doing so in color, from more than one angle, and with replays. And soon a first-class facility was constructed in Bristol.

However, there was virtually no income for Getty from sponsors because Nielsen did not count cable viewers, which was just as well. In fact, there was a reverse cash flow because ESPN was paying cable systems 2.4 cents per subscription per month to carry the channel, similar to the compensation networks pay affiliate stations.

In an effort to turn a profit, Getty began erecting an antenna that would be used to convert the all-sports channel to an all-movie telecaster, challenging Home Box Office.

Hired as a consultant, McKinsey and Co. offered a radical alternative: Instead of paying the cable systems to carry ESPN, why not charge them? Perhaps pressure from sports subscribers would make such a deal worthwhile to the cable companies. The revolutionary idea succeeded, aided when an Oklahoma cable system blacked out ESPN the week before a Sooners football game. The roar of protesting fans echoed among cable systems nationwide.

The second cash flow had begun, the envy now of regular TV, and ESPN rode the huge growth of cable and its own popularity. Every time a major contract was signed, cable paid more, an added 10 cents alone when pro football began in 1987.

ESPN now averages 60 cents per month from 63 million subscribers. This $ 453 million a year is boosted by about $ 300 million from sponsors, making it a huge profit center for current owner Cap Cities, also the parent of ABC.

The Rasmussens and Eagen retained 15 percent ownership until Texaco absorbed Getty and paid $ 237.5 million for ESPN, enabling each of the three founders to walk away with more than $ 10 million.

Chet Simmons was the first president of ESPN, giving up a similar title at NBC Sports. From his home in Georgia, Simmons still marveled yesterday over his three years in charge.

"For me, it was a challenge, and I believed in the concept," he said. "In their blessed ignorance, Getty was wonderful. When I submitted a budget for $ 10 million, they said that wasn't even the price of a dry hole. If a network had been in charge, they would have shrunk everything right down because of the losses. It probably wouldn't have survived."

The channel's four letters are magical now, gone international. Live or taped ESPN programming reaches 120 countries, translated into 11 languages. There also is ESPN Radio, ESPNET (sports information data) and even ESPN2, a questionable programming venture but moneymaker, with some 15 million homes generating 10 cents a month each.

A key to ESPN's grip on sports fans is its volume of air time. After Wednesday's late-night reports on regular TV about the potential end to the baseball strike, Peter Gammons appeared on ESPN at midnight, following the anniversary show, to discuss the baseball story at length. Real fans know where to turn for breaking stories.

Despite its wealth and popularity, an element of the underdog lingers at ESPN as it competes with and often trashes network sports productions. Egos at ESPN are large, but not as large as at the networks, and its young staff provides a great deal of drive.

The number of viewers for a single telecast still does not compare with that for a top network production. The largest audience ever on ESPN was 8.4 million homes for Bears-Vikings in 1987, less than half of that for the average Monday night NFL game on ABC.

But overall, ESPN is No. 1 in TV sports. The Rasmussens and Eagen were correct all along.

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