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Those Guys Have All the Fun - James Andrew Miller [42]

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vision, Evey turned for advice to McKinsey & Company, a consulting firm that had worked previously for Getty.

And so, in 1980, twenty-nine-year-old wunderkind Roger Werner, straight out of central casting’s crop of well-spoken Classy Guys, rode into Bristol with his University of Virginia MBA. Along with coworker Sharon Patrick, Werner set out to investigate just what the hell was going on at ESPN.

ROGER WERNER, Chief Executive Officer:

Remember, at the time, there was really no cable programming industry. There was HBO and there was Ted Turner’s WTCG, even before it was WTBS, but it was essentially just a regional broadcast television station. CNN and MTV had both been announced, but the cable industry was no more than seven to ten million subscribers nationally—it was still a tiny industry in search of a business plan. So we had to model the development of the cable television industry, literally try to predict what rate of penetration those wires would achieve over time and, based on that projection, what kind of programming industry might be generated. Essentially, we were asked to look at the business and determine the feasibility of developing an all-sports network.

I quickly figured out Stu Evey had covered up a lot for George Getty, and it seemed to me that Stu also had a lot of dirt on a lot of guys that still worked there. He was owed a lot of favors. That may be one of the most serendipitous factors in this early story, because while all this money was going out the window, Stu’s support at Getty gave us the opportunity to take three or four months to look at the development of the industry and write a blueprint for an all-sports program network.

The biggest fundamental flaw was that by the time we got involved, in the spring of 1980, the founders of ESPN had signed distribution deals with all the major cable companies promising them the service for free. They had looked at the successful guys—NBC, ABC, and CBS—and said, “Well, they pay the station groups to carry the programming, they make tons of money, we should do the same thing, be just like them.” So they effectively replicated the broadcast television business model, where the affiliate got paid a little by the network to carry the network program. We understood this would be the Achilles’ heel for the foreseeable future, and we had to build a business plan that was advertising-sales only in the near term.

I will remember this as long as I live because we had a meeting at McKinsey & Company’s office on Park Avenue with a number of the Getty guys, including Stu, and it was the day after John Lennon’s assassination. We showed them a liquidation option and the dollars they would get from that. Then we talked about another option, which was to stay in the game. We gave them a business plan, a model of what the cable industry might look like over the next five to ten years, what might be doable in terms of programming, even ratings that might be produced and ad revenue. It was a rather thorough presentation.

I don’t know what my colleague at McKinsey, Sharon Patrick, thought about this, but I certainly felt like I had stuck my neck way out. As a young guy, this was my first high-visibility assignment as a management consultant in a business I’d always wanted to be in, the television broadcasting industry, and here I was, recommending to Getty that they not give up and proceed with the network.

ANDY BRILLIANT:

I’ll just never forget this—they had affiliate contracts written on parchment paper, a little longer than legal size and folded in three, and essentially it gave the operators the right to do as they wished with the signal. They could cut it up, use it as filler material in their own local sports channels. They didn’t have to report subscriber numbers, there were no fees basically—and that’s what we were dealing with.

ROGER WERNER:

This thing was now getting much bigger and way more complicated than Bill Rasmussen imagined it would be. It was like he was the most successful Dairy Queen operator in Bristol, Connecticut, doing the best he could,

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