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will give us a 20 percent increase compounded every year.” I can’t remember if it was a six- or seven-year deal, but I did a little arithmetic and called him back. I said, “No way, George; this is impossible. Nobody can give you 20 percent compounded every year for that long. Do you know what that means for them at the end of the contract with ESPN?” So I told him to go back and check again. “I need you to go back and ask again, but don’t ask in such a way as to alarm them. Just do it casually over lunch, and say, ‘Now, let’s write this down, it’s 20 percent on top of this, and the same for the next year, and so on.’ Just play with it. Make sure they understand. And you can’t go to just one cable company; I want to make sure this is across the board.” Well, he must have gone everywhere, I don’t know, but he came back again and said, “The answer is still yes.”

GEORGE BODENHEIMER:

I remember those conversations. I would say, “Yes, we can keep it going.” I don’t know if amazed is the right word—perhaps ecstatic—but he was way beyond pleasantly surprised. For a couple years in a row, he would say to me, “Tell me again how you were able to negotiate these contracts.” He asked me that question repeatedly. “Tell me how you did this,” “Tell me again how you did this.”

MICHAEL EISNER:

What George Bodenheimer did then is the most important thing done in broadcasting since Bill Paley stole all of NBC’s stars. It made the CapCities/ABC deal. The CBS purchase would have been cheaper, but it didn’t have this.

I couldn’t say publicly that we did the deal because cable had agreed to this 20 percent compounded increase every year, because I couldn’t afford to have them know about it. Eventually, of course, they knew about it, but not till about the third year.

VIC GANZI, CEO, Hearst Corporation:

Do the math. A 20 percent compounded increase for the cable fees doubles in about three and a half years, so if the number is one in the first year, it’s two just three and a half years later, and it’s all the way up to four three and a half years after that! So if I remember correctly, we were around forty cents at the beginning and the numbers just compounded up dramatically. All of a sudden you’re at $3.20.

STEVE BORNSTEIN:

Look, I don’t have the nicest things to say about Michael Eisner, but I do respect him. He was smart enough to buy ABC over CBS because of the cable asset of ESPN, but it wasn’t the trigger for Disney to buy CapCities. That’s a bridge too far.

That 20 percent compounded interest is the most important thing that ever happened to ESPN financially and still probably the most significant contributor to ESPN’s success today, and how deep its moat is around it. And it was certainly the reason Eisner had the balls to green-light an $8.8 billion acquisition of NFL football for the Walt Disney Company.

Bodenheimer was instrumental in making those contracts flexible; he was the one that sold it through. It was his idea. I just don’t think anybody ever anticipated we would be able to get the full season, or that we would have the audacity to go for the full 20 percent. The fact that you have the ability to go up to 20 percent doesn’t mean you have to do all of it, but that’s where Michael came in big time. I give him credit. He had no qualms about stepping on the accelerator. He took the maximum amount. I figured we were going to do it for five years, but he ended up doing it for the full seven years of the deal.

BRIAN ROBERTS, CEO, Comcast:

Michael Eisner knew that the NFL was unlike any other programming, and he used it to impose the most dramatic rate increases ever on cable customers. ESPN raised their rates more than 20 percent for seven straight years. We just didn’t see that coming.

STEVE BORNSTEIN:

The cable industry knew about the 20 percent because it was in their contracts. Come on, no one has ever accused John Malone of not knowing what’s in his contracts, or Brian Roberts. These are people that are as intelligent as Mr. Eisner.

STEVE BURKE, ESPN Board Member:

In 1998, when ABC and ESPN bid on the NFL, I was