In 1978, when Stuart Evey, then a top executive for Getty Oil, heard the pitch for funding a new cable network from Bill Rasmussen, a former play-by-play announcer for a minor league hockey team, he had good reason to be skeptical...

CHAPTER 13

Easy As ABC



At about four a.m. one night in February of 1982, I realized I had to bring in a partner on ESPN or we weren’t going to pull it off. A few hours earlier, a peaceful night’s sleep had been interrupted by an urgent phone call from Chet Simmons, ESPN’s president.

“Stu, Ted Turner’s just come in with an offer that tops ours. It’s take it or leave it—only on the table until tomorrow morning. We’ve got to come up with another million tonight or we’re going to lose the deal.”

I knew immediately what he was talking about. Chet had been in New York for the last two days, negotiating with officials of the soon-to-be-announced United States Football League. Mike Traeger, a good friend of Chet’s, was representing the USFL in their television rights negotiations, and had indicated that the league was hopeful ESPN could obtain those rights. We thought we had wrapped up a deal for the programming with our initial offer. But now Turner had come in at the last minute with a million more dollars. If we didn’t match Turner’s offer, we’d lose the USFL.

The USFL would be the first professional football league to compete against the National Football League since 1972, when the American Football League merged with the NFL. Chet and I were in agreement—for once—that securing the rights to their games would be a major coup for ESPN. It would be our first live professional package, and would give us great credibility. We were trying to sign them up to a two-year deal for the rights to televise a package of their prime time games during the week Based on Chet’s preliminary discussions with the USFL’s television committee, he had determined that the package would cost us between $4.5-and- $5 million.

Five million was very big money for ESPN in those days. In fact, it was the largest sum we’d ever paid for a single programming package. I knew that we’d never make money on the deal, but I also knew it was a slam-dunk for us. The publicity alone would be worth the price. The new league wasn’t announcing its formation until May, but the sports pages were already talking about it. The league was well funded and its twelve franchises would be located in major markets across the country, including New York, Los Angeles, Chicago, Detroit, Boston, Denver, Washington, and Philadelphia. It was still minor league compared to the NFL, but that had its advantages. The major networks wouldn’t be interested. The USFL owners were anxious to nail down a TV contract and make it part of their announcement. That was fine with us, because we were anxious to be named as the league’s network when play began in the spring of 1983. The USFL would go on to fulfill our greatest expectations, generating huge fan interest before the first season by signing the likes of Heisman Trophy winner Herschel Walker, who would have been the first pick in the NFL draft that year. The initial USFL season was our highest-rated series ever, and for the next five years, franchise owners like Donald Trump kept the fans coming to the stadiums—and tuning into ESPN—by raiding the NFL for star players. In fact, Trump became a real headache to ESPN’s programming office during the USFL’s brief life. Always nagging Bill Grimes, who had succeeded Chet Simmons as president later in 1982, Trump was trying to put his team, the New Jersey Generals, on the air. He finally called me to complain. I told him that we had to show games in accordance with the contract we had with the league. “I’m sorry, Don. We can’t make any exceptions.”

Trump, who had angered his fellow owners by not conforming to league rules limiting signings of start players for the sake of competitive balance, exploded at me. “Goddamn it, it’s my money that’s keeping this league alive. I should get more games.” But that was a year down the road. Now Chet was telling me that the asking price was another million dollars. And that was a big problem. “Can we do it, Stu?” Chet implored. “It’s still a great deal for us.”

I agreed that it was still worth it, even with the extra million—and there was no way I was going to let Ted Turner get the rights ahead of us. TBS was still the biggest cable network in terms of viewership, but we were catching up fast. Getting the USFL would get us there even faster. If Turner beat us out for the rights, it could very well add another year, or more, onto TBS’ primacy in the cable universe.

At a time when the advertising industry still looked down at cable as the ugly stepchild of broadcast TV, being number-one translated into advertising money. It was no secret that advertisers who were considering cable tended to go with TBS as their default cable option for the simple reason that it had the largest viewership. I wanted to win that place in advertisers’ hearts for ESPN, and I wasn’t about to let a million dollars keep it out of my grasp. So I was willing enough to give Chet the go-ahead. But, there was one big problem: I didn’t have the authority to raise the offer by another million dollars.

At a typical television network, a network president could have swung approval for the extra money in a matter of hours, or made the decision himself. But ESPN was Getty Oil property. The oilmen who controlled the company may have agreed to back the ESPN venture and put me in charge, but that didn’t mean they trusted me to spend their money as I saw fit.

My bosses thought of me as somewhat of a loose cannon, and senior management had determined they should keep a tight leash on my pet project. They’d even recently assigned a new corporate attorney, Dave Henri, from another Getty subsidiary to head my legal team, a move that my lawyer was to tell me months later was made, “to keep Stu from going off the deep end with ESPN.” The upshot was that the ESPN budget, and any major changes in the budget, required the approval of Getty’s chief financial officer and the board of directors.

I’d spent a lot of time planning my original request for the funding to bid on the USFL television rights. My presentation to the Getty budget appropriations committee was peppered with ad sales statistics and tales of the commercial successes generated by the American Football League when it was an upstart league vying with the NFL. With the backing of Getty chairman Harold Berg, and CFO Sid Petersen, I was given approval to bid up to $5 million for the rights.

Now, exceeding the approved budget for the USFL rights meant going back to the for an amendment to the original budget. It would take time to convince my oilmen that the USFL was well worth an extra million dollars, and time was clearly something we didn’t have.

I told Chet I’d get right back to him, but the truth was I didn’t know what to do. Gears spinning, I decided to call Jerry Solomon. Jerry was the representative of the Darcy McManus Agency, the ad agency representing ESPN’s largest advertiser, Anheuser Busch. Jerry had been an early believer in ESPN and was instrumental in getting Budweiser to sign our first big sponsorship deal before we launched in 1979. After apologizing for the late hour, I told him my problem. “Jerry, I hate to ask you this, but I’m stuck. Do you think you can get Anheuser Busch to put up the extra money so we can get this thing?” He thought about it a minute. “Let me make a call. I’ll have an answer for you in the next hour.” He called me back in forty minutes. “Stu, Anheuser Busch will give you half a million. But your announcers had better mention Budweiser every five minutes during those football games.”

The Anheuser Busch money was a big help, but only got me halfway there. I could make more calls, try to dig up more cash from outside sources. But given the time frame, not to mention the time of night, it would probably be fruitless. That left me with two options: give up on the deal, or give Chet the go-ahead and take my chances with Getty. It was crunch time. I called Chet. “Okay. Do it. Raise our offer to $6 million.”

“Great. I’ll tell them.”

“You can also tell them if they ask for another penny,” I growled, “I can’t go back for more.” An hour later, he called back to tell me we had the rights.

I didn’t bother trying to get back to sleep. I got into work early and camped out in front of Harold Berg’s office. When he came in, I grabbed him. “Harold, I’ve got to talk to you. It’s about the USFL deal.” I told him what had happened, that we’d had to make the commitment last night or lose the rights. I made sure to tell him how I’d gotten Budweiser to put up half. In the end, he told me not to worry, he’d authorize the necessary adjustments to the budget.

I knew after that night that we couldn’t go on operating like this. The further along we got with ESPN, the more often things like this would be happening, and the more money would be involved. I was risking my career every time a quick financial decision was required. Eventually, we were going to either lose a programming deal that we really wanted, or I was going to be raked over the coals by my superiors at Getty for authorizing expenditures I wasn’t authorized to make. The money itself wasn’t the problem. The amounts being invested in ESPN were small potatoes for a company like Getty, which in 1981 had operating cash flow of $2.7 billion. Still, profits had been down last year and looked worse in the current year. Operating a peripheral, unproven business at a steady loss, at a time when fortunes were at low ebb, did not exactly make me the most popular man at the company. In fact, it was about this time that a joke started circulating around Getty headquarters, directed at my regular advocacy for pumping more money in to the network: ESPN really stood for the Evey Sports Programming Network. Believe me, it was not meant to be complimentary. Outside of my Diversified Operations group, Getty people didn’t particularly believe in ESPN. It had started out as a novelty, but the novelty was wearing thin with every passing month of losses.

It was clear to me, as it would be to any media executive, that we had to keep growing the business. Our subscriber base continued to expand and we knew we were gaining new viewers at a fast pace. Cable TV News had recently named ESPN the cable network with the greatest “lift,” meaning cable subscribers requested our network be made available more than any other cable station. Unfortunately, we couldn’t back up the indications of our increasing viewership with the hard numbers the advertising industry wanted. That kind of statistical evidence would have to wait until AC Nielsen deemed our audience large enough to rate.

It was a Catch-22. Building our subscriber base to the number at which Nielsen would start rating us meant spending more money on better programming in order to attract those viewers. But Getty was reluctant to keep spending more—and losing more—money until we could show solid proof that our bottom line was improving. Standing still meant falling behind, and we didn’t have much room to slide back. I was walking a tight rope, trying to balance the needs of my people back in Bristol against the demands of Getty people here in LA. It was an uncomfortable way to operate, to say the least. I was beginning to worry about how much further I could pull Getty in before my career was at risk.

Up to this point, Getty had spent nearly $50 million on top of its original $10 million investment. ESPN had recently hit a “burn rate”—the amount of cash flowing out above and beyond the cash from revenues flowing in—of $8 million per month. That was an alarming number. If we kept “burning” through Getty money at that rate, our losses on ESPN would nearly double in six months, and reach $150 million by the end of

1982. Those were the kind of numbers that would not escape the attention of Berg’s office or the board of directors. Those were the kind of numbers, in fact, that could finish ESPN and lose me my job. I feared being out in the world—hat in hand—in a marginal economy, having helped bring down a giant corporation. Not a pretty prospect for a guy who’d given his all for the corporate team Getty.

Back in 1979, when I’d gone to the board with my first request for more money to keep ESPN afloat, I’d said, “Gentleman, I promise you I will never take us in further on ESPN than I can safely get us out.” I had a long record of making money for Getty with unlikely ventures, and they believed me. That promise held true until Getty’s investment reached $50 million. In the short time since Bill Rasmussen had leased ESPN’s original satellite transponder for $1 million a year in 1978, the going rate had soared to $30 million. We owned the rights to two transponders now. I could recoup our investment thus far by selling our transponder rights. But ESPN required more investment from Getty every month, and I had no idea whether I could get Getty out of ESPN in a year’s time without taking heavy losses.

Getty’s relationship with ESPN had reached the breaking point. I knew I couldn’t give the people in Bristol the money they needed to make ESPN a better network. The next step was clear: we needed to partner with people who knew their way around a television network, understood how a network operated, and had a feel for—and a tolerance of— the kind of expenditures needed to make it successful. The logical choice was an affiliation with one of the major networks. It made sense. But that didn’t mean it was going to be easy. The big three broadcast networks had a love-hate relationship with cable television that was more love than hate at that time. But we did have our own talented people who could call the shots under great pressure and spur ESPN to at least maintain the kind of profile it needed to attract such a partner; at the helm was the focused and often prickly Chet Simmons.

While ESPN sportscaster Chris Berman would light up like a Christmas tree when he mentioned the New York Giants or Philadelphia Eagles, his favorites, I knew not to expect a lot of enthusiasm from Chet Simmons about sports—or business, for that matter, including what I then considered some key deals. I figured he wasn’t going to bubble over about the Premiere pay movie venture with the studios, which he didn’t. I thought he’d appear less irritated at the posting of the one-million-dollar bond for the 1984 Olympics. Chet viewed that Olympian effort as little more than a ridiculous publicity stunt—one that degraded the network to boot.

Obviously, Chet and I had our differences, and then we re-had our differences. Differences are like germs, if you will, in that they mutate from day to day. But what grew increasingly irritating to me and to management, including Scotty Connal, was the negative cast in which Simmons viewed so many new ideas. And ESPN was a very big new idea.

When I was suggesting some new direction, tactic, or ploy, I felt like an outsider trying to break in—even though I was officially the boss. The term that oddly enough comes to mind in relation to Simmons is “cowcatcher.” A cowcatcher was an announcement that took place in the beginning of early-day broadcasts and would try to sell something other than that of the main sponsor. It seemed I was always trying to sell something else. Chet had his way of doing things, and new ideas—often what I thought of as creative ideas—would typically meet with his disdain.

Sometimes I was even right—incontrovertibly right, at least, if the idea’s ultimate acceptance is any measure. In a memo to Chet Simmons, I wrote: “Congratulations on a good weekend. I’ll be interested in the overnight ratings for the football game. While watching the Oregon game on Saturday, Dan Burke and I were discussing the possibility of imposing the game score on the screen so that the audience would always be current on the status of the game. Since our audience is low at this time, it would seem that experiments with this and other innovations might be interesting. Let me know what you think.” I signed the note and, several days later, received Chet’s answer on the bottom of my note from the secretary. She wrote: “Chet called and said that showing the scores will not work. Detracts from game for viewer/and announcers are instructed to give scores at least once every two minutes.”

Today, superimposing scores on the television screen has become the norm for many television sports presentations. At the time, I was surprised at his response. I thought—and still think—that Chet didn’t understand a lot about sports in his deepest self. And the love of sports truly lies deep in the souls of real fans. I wondered if he had ever felt the suspense and anticipation of returning to the television room where the drama of the game was unfolding only to have to wiggle and wait for the do-or-die information we call scores. If he had, he might have been a little more accepting of the idea, which is a small example, maybe. I assume the idea of keeping the scores before the audience resulted from others, but I am pleased to have a letter documenting that I was perhaps among the first to try to implement what was, if I do say so, an excellent idea. I began to feel as though I represented the sports guy with Simmons (certainly not with Scotty, a confirmed fan), though I wore the executive-in-business hat most of the time.

On the face of it, we were different—Chet and I—too different. I was a corporate guy; Simmons was the sports executive. I was flamboyant, preferring to wear sporty colors and to play golf, neither of which he really cared for much. My overall feeling here is that what made the two of us so different were our own unique perspectives on life and living. I don’t want to suggest that Chet didn’t offer up ideas. He did. He wanted to expand ESPN into regional areas in the country, for one. Movers and shakers in business all have their own styles, and sometimes the chosen—or divinely conferred—style is not altogether reasoned, decent, or fair. I think of Harry Cohn, movie mogul, head of Columbia Pictures in the early days. Bob Thomas writes in King Cohn: “Few things gave him more pleasure than to be able to spring some information that was believed to be secret.” Cohn, Thomas reminds, had, on each of the Columbia sound stages, microphones that connected to his office speaker. Thus, he could follow everything.

Harry Cohn was important—and he was everywhere. Thomas offers an amusing example of Cohn’s ubiquitous handling: “A rehearsal on a minor film was once interrupted by the disembodied voice of Cohn saying, ‘That was lousy. Try it again.’ “‘Who was that?’ asked the startled actor, a free lancer.

“‘God,’ replied the director, continuing with the rehearsal.” (from King Cohn. NY: G.P.Putnam, 1967. P. 194.) I was no God, and I hope I wasn’t a Harry Cohn—though some people would try to paint me in negative ways. I didn’t have a secret eavesdropping method—I wasn’t that paranoid—but I insistently sought to keep track of what had occurred on the ESPN broadcasts I received by satellite on my Los Angeles office television. Still, it goes without saying that I constantly needed to be appraised about what was going on in Bristol. I had no spy system like Cohn, nor any secret link, but at some point, I came to depend too much on the television set for my information. I had become—of necessity—a business couch potato. Though I made calls to Bristol daily many times—and many of the executives were marvelous and forthcoming—I still needed a more direct communication, a more open dialog, with Chet Simmons, and I was left with what I could glean from my television. Call someone else? “Not so fast, my friend,” as ESPN’s sportscaster Lee Corso would say. Unfortunately, because of his position, Chet could answer certain things that no one else could.

I believe communication is not just the name of the game; communication is the game! And Chet didn’t want to play. I’ve often thought how much of communication is simply the desire to communicate. People who work to communicate, risk standing accused of redundancy or arrogance. Such has occasionally been said of me. These people need solid, even buttressed, egos, and I was therein blessed. All right, so I repeat myself. But under this scenario, the likelihood of a total misfire in communication is reduced. I might say to someone in this situation, “I don’t mean to insult anyone, but we need to know we’re on the same page or rowing in the same direction.”

Anyway, Chet, with his baleful and secretive moods, somehow had me feeling as though I were like some sort of predator—or worse, scavenger—always stalking what I needed: information, figures—the stuff of meetings where what I would present, or could present, really mattered, even in sustaining the life of ESPN. By 1981, I knew I needed to do something about Chet Simmons, as outstanding as he was in some many ways. But what could I do? I didn’t want to let him go outright. I wanted him to land in some other job. But I couldn’t abide the situation with him at ESPN any longer. He would have to go, and I’d have to figure out how.

Suddenly, one day, out of the blue, I received a call from my good friend, Bill Daniels, who then was the new owner of the Los Angeles Express team in the USFL. Bill seemed in a hurry. “Stu,” he said, “I’d like your permission to talk to Chet Simmons about the USFL commissioners job.”

I was flabbergasted and expressed concern about losing Chet, but I told Bill Daniels I didn’t want to stand in the way of Chet furthering his career. When I hung up, I bowed my head. My private prayers had been answered. On June 14, 1982, the United States Football League named Chet as Commissioner.

I knew we’d miss Chet’s reputation and relationships—which were invaluable— but I wished him well. I wanted him to succeed, and I felt the slow linger of sadness in my mind about our relationship and dealings. Still, it was for the best. ESPN had to go on, and I believed that Chet would have had a deleterious effect on ESPN’s rise to far greater levels, but Chet went on to perhaps more appropriate climates and would soon play a key role in the early success of the USFL. And he’d left imparting to ESPN an admirable reputation in the burgeoning industry of cable TV.

In the late 1960’s, the broadcast networks, recognizing that cable TV presented a threat to its dominance of the airwaves, successfully lobbied the Federal Communications Commission to prevent cable from coming to the nation’s largest one hundred cities. They based their arguments on the grounds that cable threatened the public’s right to free television. By 1972, the FCC repealed its earlier rulings, and cable slowly began to fulfill the broadcasters’ fears of costing them their chokehold on the nation’s viewing audience.

When I had set my people to researching the cable business back in 1978, we came away with the impression that cable programming was poised to break out. Nationally, Home Box Office and Ted Turner’s WTBS Superstation had established programming They were developing a loyal following with viewers hungry for an alternative to the programming force-fed to them by the networks.

Still, the prevailing attitude amongst the commercial networks was that the public wouldn’t be willing to pay for programming they were getting for free. That attitude especially held true for sports, despite the success of regional sports cable networks like Sports Channel New York, and the Madison Square Garden Network, which featured New York’s local hockey and basketball teams. But by the time ESPN launched in 1979, executives at ABC, NBC and CBS were beginning to fully appreciate the competitive challenge cable posed to network television. One of those executives was ABC chairman Leonard Goldensohn, whom I knew socially through our mutual involvement in the Los Angeles chapter of the United Cerebral Palsy Foundation. At a UCP meeting just a few months after ESPN’s first cablecast, Goldensohn pulled me aside. “How are you managing with Simmons and his crew?”

“It’s a different world,” I told him. “But I’m learning.”

“You’ve got the right idea with ESPN. But when you Getty folks get tired of playing at being TV people, you let me know. Maybe I’ll take it off your hands for you.”

I laughed. “Maybe we’ll be able to do the same for you some time.”

But Goldensohn had seen the light, and ABC was the leader among the majors in getting involved in cable programming. He established a division, ABC Video Enterprises, devoted to providing programming for cable and other alternative distribution media, such as video and pay-per-view. By 1981, ABC had launched its first cable network, ARTS. Soon after, NBC’s parent company RCA started the Entertainment Channel. The two would later merge to become the Arts & Entertainment Network. The major broadcast networks were making their first, tentative investments in cable TV programming. Their executives knew that cable was not going to fade away. Still, ABC, CBS and NBC remained wary and more than a little contemptuous of cable programming, and did not want to anger their local affiliate stations by creating competition for them. If I were to engineer an advantageous partnership deal with one of the networks, I would have to avoid the perception that I was coming to them with my hat in my hands. I probably could have made a phone call to Goldensohn and persuaded ABC to take a piece of ESPN. But then the deal would be made on his terms. I wanted some financial and operational support; I didn’t want to turn ESPN over to ABC, or make Getty a junior partner in a company that I’d worked so hard to build. I wanted them coming to me. Given ESPN’s precarious financial situation, it would be difficult to swing a partnership deal with a major network on my terms. But in the TV business, egos were often as important as bottom lines. When it came to television, perception often had as much to do with success as reality. None of the networks wanted to appear as though they were slipping behind the others. Bragging rights led to publicity, which produced higher ratings.

I intended to play those egos off one another in order to drum up interest in partnering with ESPN. It was a chancy idea, one that could easily backfire. But I was used to that. The biggest of those egos belonged to Roone Arledge, who had built a huge reputation as a brilliant innovator running both ABC’s sports and news programming divisions. He was responsible for creating Wide World of Sports and Monday Night Football and for bringing the Olympic games to ABC. From what I could see, Arledge’s interest in ESPN was minimal—perhaps on the order of a fly on an elephant's back. But I figured if someone like Roone Arledge heard that another broadcast network was courting Getty to get in on ESPN, he’d get interested himself. I decided to leak a rumor that Getty might be interested in selling ESPN.

The best person I knew to get a good rumor started in the television industry was Ed Hookstratten. He was the powerful Hollywood and TV agent who’d advised me to hire away Chet Simmons from NBC and make him ESPN’s first president. Ed was now on retainer with Getty as a consultant. I decided it was time for him to really start earning his pay. I called Ed and told him we needed to talk.

The Los Angeles Club was on the top floor of the Getty building. This was still the heyday of two—and three-- martini lunches. The bar area had four booths, one of which was my personal doma

in. I often met people here on business. I liked the clubby atmosphere, and I liked doing deals with a drink in my hand. Ed sat himself down across from me. “What’s up, Stu?”

“Do you think one of the networks would be interested in buying ESPN?”

He just stared at me for a moment. “Jesus, Stu. Are you serious? What are you talking about exactly?”

Here’s where I had to tread carefully. I needed Ed’s help to drop the lure, but I knew he wouldn’t go so far as to knowingly set up people like Roone Arledge or his counterparts at NBC and CBS, Don Ohlmeyer and Neal Pilson. These were the men at the top of the food chain from which Ed feasted. If word were to get out that Ed had participated in a scheme to manipulate them, his name would be shit in television. Ed was a friend, and I didn’t like having to manipulate him, but I decided I didn’t have a choice.

“I don’t know exactly. It’s nothing definite yet,” I told him. “You know we’ve been taking a lot of losses lately, and I think the board is starting to get antsy. They might want to start thinking about getting out of the TV business. I just want to be out in front if that happens.” Ed absorbed this in silence. “What do you think? Would the networks be interested—if we were to be interested in selling, that is, which is far from definite?”

“I don’t know, Stu. It’s certainly a possibility.”

“I’d like to seed a rumor that we might be thinking of selling, to gauge the amount of interest out there without actually having to say anything definitively. Can you make some calls, get the word out to the people who would be interested?” Ed agreed, but he didn’t want to involve NBC. Most of his top clients, including Tom Brokaw, Bryant Gumbel, and Dick Enberg were there, and he didn’t want to jeopardize his relationship with the network. So it would come down to ABC and CBS. That was fine with me. ABC was the most aggressive and innovative network, and CBS, with the Tisch money behind it, had very deep pockets.

After the debacle over securing the rights to televise the new United States Football League—when I had to beg, borrow and almost steal—I was feeling like I’d had already had more bumps than a greyhound on the first turn. Now, I had to do something about it. I knew Getty wouldn’t carry a television-broadcasting network for too long. It wasn’t the oil giant’s style. The very nature of television recognizes that rights fees for programming is paramount and often requires split-second decisions which, if not executed, can preclude key opportunities for some time in the future—and mean severe repercussions on the stability of the network. Major financial decisions, particularly those that require short time frames, were not Getty’s mode of operation. Decisions on digging wells or investing in new tankers took weeks, not days or hours. Thought it worked for oil and gas investments, the approach didn’t work for the constant and radical shifting world of media business. I used to feel at Getty like we were back in biology class, and if we couldn’t study it under the microscope, we couldn’t find it. The world was an amoeba or a euglena.

I didn’t want to let ESPN go under for personal reasons, but I recognized that the Mc Kinsey study had made the point that success was further out in the future than originally projected. I needed a cushion, and I knew Getty’s patience would wear thin with continuing losses. The prospect of classifying ESPN a dry hole could be sooner, rather than later.

Again, I called Ed Hookstratten, Hollywood agent extraordinaire. If there are six degrees of separation between the average person and Kevin Bacon—or anybody in the world, for that matter, as the popular idea has it—there were many fewer separations between much of the celebrity world and yourself, if you happened to know Ed and could enlist his help.

“Could you call Roone Arledge and see if ABC would have any interest in exploring possibilities for forming a relationship with ESPN ”

“Are you serious?” Ed said.

“Kind of,” I said, belying a rare—and certain—trace of uncertainty.

Ed questioned me awhile. I found myself coming back with words like “I’m not sure.” I wasn’t used to talking like this. In fact, I felt in those moments like the world’s poorest salesman, not someone who had always taken pride in mastering those business twins—the gift of gab and the play of negotiation.

“If you want to explore it, go ahead,” I said. To this day, I don’t know how seriously Ed took me, but I knew he would enjoy this opportunity to speak with the legendary Roone Arledge on matters other than the entertainment and sports talent he represented.

After Ed called Roone, it wasn’t long before Roone called me. He sounded tired—or bored, maybe. “I understand you’re about to give up on the lousy business we’re in,” Roone said. “Where’d you hear that?”

“I got word that you guys were tired of television.”

“Not at all,” I said. “We just secured the rights to the USFL, our first live professional programming, and things are looking quite a lot better.

Roone had a way of sounding serious, even when he was only partly so—more like coy. “We’re not really interested in getting cable,” he said. “Our network affiliates, for one thing, wouldn’t be too happy if we were to share our expertise and programming with cable television interests. Also, we don’t really think delayed or taped sports events on cable television is going to be major factor… but since I had heard that you might be discouraged from your foray in to the business, I thought I would give you a call.”

I told Roone I appreciated the call, and that should there be an interest in the future, I would let him know.

I knew that Hookstratten represented Phyllis George, the gorgeous Miss America of 1971. She was now a top talent at CBS, and I figured he might make inroads at CBS through her, if not through his regular connections.

“Why not call Gene Jankowski at CBS and see if they have an interest?” I suggested to Ed that he drop the information on Jankowski that I recently received a call from Roone Arledge about a possible interest in ESPN. Jankowski was group vice-president of CBS television. So Ed called Gene, and Gene rushed to call me.

“I understand you might have an interest in getting out of the business,” he said, for openers.

“I don’t know where that’s coming from,” I said. About this time, I let slip that Roone Arledge had called me about ESPN, saying he had heard the same thing. I did that on purpose because I figured—with what I knew of the men—that I was onto to something. I knew the two men’s personalities and that neither would want the other getting anything over him: Type A plus Type A equals B—for bidding war. And I was already suited up for battle.

“Listen,” Jankowski said, “don’t make any moves before you talk to us.”

I must have cracked open a larger mouth smiling. I knew then that I had the game afoot. I had seen plenty of business people suffer in the past by not keeping the communication open, especially where they had to about-face on a deal they had spoken for and promoted so loudly. I wasn’t about to have that happen, but I also didn’t know what would happen in the corporate halls if I did. I needed to find out.

One morning, I arranged for a meeting with the chairman of the board ,Harold Berg and Chief Financial Officer Sid Petersen, and I tried to feel them out about what I was about to do. I thought if I could assuage any ill feelings that might erupt in the meeting, I would not be blind-sided nor second-guessed later.

“I’ve got this deal moving,” I opened, nervously. “If I carry on, I might not be able to stop it.”

“Someone’s interested in ESPN?”

“Yes, there is interest,” I said. I must have gulped hard at this juncture. “Do you have any objections if I carry on these discussions…recognizing they could lead to an equity participation?”

I further explained it was my idea to get someone to buy a minority interest in ESPN. For that, we’d get the cash that would help finance the operation for some time into the future. More importantly, we also might end up with a big name—a powerhouse in sports television, which could only enhance our credibility.

“By all means, go ahead,” was the response I welcomed from Berg and Petersen.

I called Roone back and hit him with the absurdity of the rumor idea again. “I know this damn rumor’s going around, but if you want to come out and talk to us, I’d be glad to meet with you.”

“What do you think you want to do?” Roone said.

“I’ll probably sell an option to buy into ESPN. We don’t want to sell the company—if, we have interest in doing anything.”

“What are we talking about?” Roone said.

I laid it out for him: “We have transponders, buildings and mobile units, and are showing steady growth with cable operators. These are substantial assets that can either be used by others, or liquidated, should that benefit the participating partners.”

The well-poised silence at the end of the phone line did not escape my attention. God, he was good! “It’s not that they are worthless,” I burst in. Roone was getting impatient—I could tell. “Well, how much?” he said.

“Maybe 10 million to make any transaction worthwhile, but how much that would buy would have to be determined…assuming there is interest.”

“I’ll let our guys know,” he said.

Upon hanging up, I sat there, exhausted.

Sometime during the next few days, I heard from Herb Granath of ABC Video Enterprises, who had heard from Roone, and was at least on the surface, interested.

Granath, and Fred Pierce, ABC’s executive vice president, made arrangements to fly out and see me about the deal. In the meantime, I needed to call Jankowski at CBS while I tried to keep the ball in the air, flying as it was, just within reach among us all. He answered in his typical low-keyed voice. I said, “The ABC brass are coming out to talk to me. Do you have any interest in seeing this thing further along?”

Jankowski soon had his number one sports guy, Neal Pilson, at his side. “What are you talking about for money?” Jankowski asked.

I told him the numbers had not been thoroughly discussed and that we were merely feeling out the currents at the time. I had a time-tested caveat, though, which I shuffled into the mix. “Being a potential equity sale, I will have to present an idea of this nature to our executive management.” It was my own personal back door, a kind of escape clause.

The next week, Pierce and Granath came out and met with me, attorney Dave Henri, executive assistant Dan Burke, and finance officer Louis Rambau. We spent the better part of the morning hashing over the deal and weighing the positives for both parties. They asked how much it would cost. Then I jumped in determinedly, reminding them that CBS was in the negotiation, too. “We’re talking about a minority interest at two million dollars a point. We’d like to sell ten percent immediately, with an option to purchase up to 49 percent in five years.”

“I thought it was $10 million dollars,” Pierce said.

“We’ve kind of decided that we would sell ten percent for two million a point.”

“Oh,” Pierce said. We continued talking it over for a while, and then Pierce suddenly jumped up: “Can we use a phone?”

I said, “Sure.”

I escorted the men to a private phone and they called—I would learn later—Leonard Goldensohn, Chairman of ABC. They told him the asking price, apparently, and must have explained that CBS held a strong interest. Goldenson told them to offer $20 million.

In the time it would take to make a slap shot at the net, I called Jankowski and told him of the offer. He was pleasant, but I could tell he was disappointed. “We couldn’t have done that amount anyway,” he said, resigned.

I felt sorry for him in a way. But it was a negotiation. “I said I’d call you, and I did,” I reminded him. We hung up.

I had another deal I had discussed with several others, and I needed to explore it with ABC. The ideal time for further discussion was soon, before the climate for negotiation had passed. When I got together with the ABC people again and told them that Getty had accepted the option deal, contingent upon a side deal being made on securing programming from ABC, they looked puzzled and somewhat put out as if supplying ESPN with money and their name was enough. Was I asking too much? I would soon see.

ESPN was the great devourer of sports programming. The “insatiable appetite,” as I would say—needed more and more hours to fill the 8,760 hours a year needed for a 24/7 network. We had been on the air twenty-four hours a day for nearly three years. I was convinced that ABC, with its flagship program, “Wide World of Sports,” would offer great programming potential. After all, “Wide World” would usually broadcast the highlights of a sporting event—skating, skiing, or whatever. We could televise as much as we wanted of an event they didn’t use. Furthermore, “Wide World’s” producers could shoot additional footage—more than they might need themselves—for distribution to ESPN.

Over a period of time, negotiations for the programming were contentious—if not ugly. But since we had not yet finalized the option deal, and because ABC was so anxious to get in ahead of CBS, they gave in. We finally settled on several classifications of programming, which we referred to as A, B, and C. ABC agreed that ESPN would get so many hours of A programming, so many hours of B programming, and so many hours of C programming at predetermined rates. Some of the programming came free; others were extremely reasonable, and certainly much less than if we were to produce this kind of programming ourselves. Of course, it wouldn’t even be available to ESPN without this fortuitous affiliation with ABC.

Good programming immediately grew out of our new liaison. We began Thursday and Friday golf by getting the British Open rights for those days from ABC, since they only televised the Saturday and Sunday action. We would bring back 12 hours of programming. That began the Thursday-and-Friday golf on television, so much a part of today’s golf programming. ABC benefited, too, because it was able to pair “Monday Night Football” with two games on ESPN later in the week and helped it maintain profitability. (p.439 Goldenson)

In Goldenson’s book, Beating the Odds (p. 436), Fred Pierce penned what sounds to me like a left-handed compliment: (I was getting used to left-handed compliments. I had received them for the same big people, like Steve Bornstein.) “Stu Evey was a tough, unique individual…” I don’t know if I was tough or not, but I knew we had something of value, and I wasn’t willing to give it away.

The earlier question about the worth of the company being one million dollars a point was a fair enough question. But I wasn’t about to tell anybody I’d created the number out of thin air. I had little choice, really. Going by numbers alone would be an exercise in futility. How do you fairly value a company like ESPN in 1982? We had invested $60 million, managed only slow revenue growth, and were burning through another $8-to-$10 million a month. On the other hand, the most crucial variable for measuring a TV network’s success—viewership—was growing at anything but an incremental pace: in less than three years, we had quadrupled the number of homes that could tune in to ESPN. The buzz in the industry had us approaching the breakthrough point in audience numbers that would net us the all-important A.C. Nielsen ratings measurement.

There had been no comparable sales of a cable channel either, so I was effectively setting the market for a cable TV network. I certainly didn’t intend to come cheap. At $1 million per point, I figured that selling 49 percent of ESPN would almost cover Getty’s investment thus far and still leave us with majority ownership. The next week, it hit the headlines. The biggest network in TV was coming on board the ESPN train. You don’t think my board of directors suddenly loved me? For a ten percent share, I’d doubled our original $10 million investment, and now we had a property that was suddenly valued at $200 million, 75 percent was ours.

Overnight, the attitude at Getty changed dramatically. ESPN was no longer the Evey Sports Network. Now it was, “Getty’s in the TV business—aren’t we clever?” “Another miracle by Evey,” someone whispered to me at Getty, as if selling my prize wasn’t tearing me emotionally. Yet, everyone from the board of directors on down was excited about ABC’s involvement. This was as clear a validation as you could get. And for me personally, the best thing was that I could present it to Getty on a silver platter. I had done this deal, the whole thing, on my own. It was one of the most memorable achievements of my long career. It truly saved ESPN, and made the risk I had taken with Getty’s money look brilliant.

Over at ABC, however, the feeling didn’t seem quite as mutual. Although we announced the deal jointly in March, the agreement wasn’t signed for another six months. ABC’s lawyers kept trying to make small changes in the agreement. Most of their demands were trivial—raising the price for the programming they would sell us, the years on the option. Every time they came up with a new demand, I’d tell Dave Henri, who was negotiating the details, to agree to them so we could sign a contract and get the money.

After yet another week had passed without an agreement, I called Henri into my office. “What the hell’s going on with this agreement, Dave? I want to get this thing rolling. Is this a case of a bunch of goddamn lawyers doing bullshit haggling, or is this deal going to fall apart?” Henri had just returned from what had turned into a monthly negotiating trip to New York. “They’re pissed off, Stu.”

“Why?”

“I think ABC has gone back and taken a hard look at the deal, and they feel like you pulled one over on them. A lot of ABC people, especially Arledge, feel like they paid too much and gave away too much. They’re coming back at us with all these little demands because they’re pissed off about being out-negotiated.”

“Well for Chris sake,” I told him. “Massage their wounds and get that damn contract signed. I want it by the quarterly meeting.” The Getty board of directors met every three months and I didn’t feel like explaining to them why we still didn’t have the ABC money in hand nearly six months after announcing the deal.

Finally, we inked the contract. It was titled the Advance and Option Agreement between ABC Video Enterprises, Inc., American Broadcasting Companies, Inc., ESPN and Getty Oil Company. The contract was signed by signed by Herb Granath, Fred Pierce, and Bill Grimes of ABC, and by S.W. Evey of Getty Oil Company.

The signing date was August 9, 1982.

ABC threw a signing party at Tavern on the Green in New York. There were thirty or so people present that evening, most from ABC. There were five of us from Getty and ESPN: myself, David Henri, Dan Burke, Ron Doutt (my division's financial manager) Ed Hookstratten, Bill Grimes,and myself. ABC’s contingent included its chairman Leonard Goldenson, ABC’s executive vice president Fred Pierce, President of ABC Video Herb Granath, the Executive producer ABC Sports Roone Arledge, and Howard Cosell, President of the world and everything else. The mood at our table was downright giddy that night. I was so excited that I felt like dancing with my shoes off. And why not? We finally had a partner contributing money, and there was all that juicy programming that ABC didn’t use that we would have access to. Most of the ABC folks seemed pleased too, but Arledge and his people clearly were not. He was visibly unhappy to be there.

Over dessert, we toasted our new union. When it was my turn, I congratulated everyone involved for a deal well done. Then I raised my glass to Arledge. “And Roone,” I said, “I especially want to take this opportunity to welcome you to big-time sports broadcasting.”

Everyone burst into laughter—everyone except Roone, who didn’t even crack a smile. He sat at the table stone–faced, his big fat cigar burning to ash in his fingers.

Later that evening, several of us took a horse drawn buggy ride around Central Park, past the elegant Plaza and St. Moritz Hotels, where I wanted desperately to have a few drinks and relax. On the buggy, I was seated with Ed Hookstratten and Roone. Arledge didn’t say a word the entire ride. As we glided around the park that night, looking at the winking lights of “the Big Apple.” I couldn’t help the sinking feeling that Roone’s silent anger meant ESPN’s ride with ABC wasn’t going to be nearly as smooth as this one.

In 1984, the potential for an even bigger deal seemed in the offing. In fact, during this time in the inner sanctum of Getty, the place was rife with the prospects that the company might be sold. I was invited to join ABC at Sarajevo, Yugoslavia for the Winter Olympics. I liked Sarajevo, and was impressed with the friendly people who would later be swept up in a bloody war. I had spent the afternoon watching the Russian bobsled team work out. They were obviously getting paid and were deadly serious, though they were nice enough to visit briefly with me through a translator. I got to thinking about how I’d like to own a bobsled and be a part of the Olympics in this way. Then I thought it would be like owning a racehorse, and that may have discouraged me from pursuing a bobsled. Then, too, I might be out of a job, unable to buy much of anything.

As a group of us rode along in a bus, heading for one of the venues, I seated myself next to Fred Pierce, president of ABC, and casually broached the question of the sale of the rest of Getty’s interest in ESPN. As we headed toward a squeaky stop by the bright, new stadium, I was pleased to hear the somewhat reserved gentleman suggest we get together to revisit the idea before dinner. We sat down later in some overstuffed chairs overlooking the mountain, and continued our conversation. I drank ouzo, a strong anisette-flavored liquor of Greece that somehow conjured up my tequila days in Mexico. “I don’t want to be encouraging,” Fred said. “We’re cash poor.”

I acted surprised.

“We’re renegotiating Barbara Walters’ contract. Got some other things cooking that will cost us a lot of money. It’s probably not a good time for me to float the idea.”

I figured he was telling the truth here, because I had heard about the Barbara Walters negotiation, and knew they had invested heavily in other ventures including cable programming. “What is the exact deal?” Pierce asked.

“I’m thinking of $175 million,” I said. “That’s a pretty good deal,” I hastened to point out.

“Still a lot of money for a company losing money,” Pierce said.

“Yes, but it’s a lot better than the $200 million we had set for ESPN when we sold you the ten-percent option in 1982.” Now, we’re being rated, and it has far more potential for success.

At the time, I figured it would have been a good price for us at Getty, should the prospect of someone buying the company were to become a reality. Also, the cash in the bank would likely be of greater interest to the purchaser than a cable television network that was sucking up $25 million a year.

“I’m just projecting this as a possibility,” I told Pierce. “You do have the right of first refusal in our present agreement. If this thing goes into play without me having control of it, it could cost you a lot of money, if you want the majority interest in ESPN and are forced to top other offers.” Whether it was because of the network’s financial situation, or his reservations, Pierce and his ABC network didn’t pursue purchasing ESPN. I shook it off, surprised though I was. I figured I might get a call after he had thought about it or consulted some of his management.

But ABC needn’t have been out of it yet, for when the announcement came that Getty intended to sell its assets to Texaco—which included ESPN—it kicked in that right of first refusal for ABC to purchase ESPN from Getty, or Texaco, for that matter, if they elected to sell their interest in ESPN. We had determined in meetings with Texaco that they did not intend to keep ESPN. Quite simply, the petroleum giant had to amass a lot of money to buy Getty, and at a price that would amount to, at the time, the highest corporate purchase in history. Then came the worrisome task of nourishing the company, and ESPN still needed a lot of nourishment in 1984.

Texaco officials asked me if I knew of any interested parties that might want to buy the newly purchased sports operation. “It would be pretty easy to get the word out,” I said, over my lobster bisque. “There are some that likely might.” In less than five minutes after I had left, I was sitting in my car rental, busily composing a list of some potential players, buyers with the cash and possibly the motivation: Ted Turner, Landmark Communications, as well as several others. Immediately, I thought of my friend Bill Daniels of Denver, who was a communications broker. I was consumed with some deals in the agriculture division of Getty and, besides, I didn’t want to broker a deal. I would bring in Bill.

I made an appointment for Daniels and me to meet Texaco’s senior management at the company’s headquarters in Rye, New York. Bill did a presentation of what his organization had done in similar situations—and what he could do for Texaco—in effecting a sale. The dialogue was direct and flowed quickly over the subject of his brokering the sale:

“Here’s the asset in our view,” Bill detailed. “Here are our ideas for selling it.” He explained how he knew nearly everyone in the communications field, and spoke of several sales of major properties he’d made. Then, in his charming affable way, he sought to close the deal. “My company would like to represent you,” He said. The pause gave me enough time to look around at everyone in the room.

“If you give me the agreement, I believe I can make you a nice sale,” Bill said. “We’ll be in touch,” was the response.

After Bill’s persuasion, I thought it was all a done deal, though not done. But I left there, uncertain. There was something unusual, a subtext, perhaps, like they talk about in relation to movie dialogue. I couldn’t put my finger on it, though. Maybe I was imagining things.

Soon, I would learn that, indeed, we were up against an undercurrent of minor intrigue attached to the situation that seemed to following me everywhere, like a moth fluttering around my head.

I would soon learn that something big was about to unfold in the blinding reflection of sunlight on the oak paneling of the Texaco Corporation offices. About the time that I was certain the deal had unraveled as completely as a baseball patched up with too much electrical tape, I learned that one of the members of the Texaco board of directors, Tom Murphy, chairman of Capital Cities Corporation, was also a board member of ABC.

The man from Capital Cities, it appeared, was counseling Texaco to negotiate a direct sale to ABC, and thus, eliminate any possibility of ABC having to top other offers, and thus acquire majority interest in ESPN. ABC bought ESPN for a price of $225 million, substantially more than the $170 million price tag I had offered them at Sarajevo.

Pricing is not an easy matter, especially when someone has put a lot of investment dollars into something, as we had in ESPN. But I had laid the groundwork for pricing with the original option price, by which I sold 10 percent to ABC for $20 million. The move served as a guideline toward an attempt to determine a solid value, one that would possibly be within the realm of enticement. It really set the stage for future value.

This earlier purchase-option agreement with ABC had also held other benefits. For one thing, it had helped me at home with Getty Oil. Not only had our company received a needed infusion of substantial cash to help with operating expenses, I could start using that figure as a kind of baseline for value. Not too bad to now be talking about those kinds of numbers, when the perceived value at the time among many people, including some of our corporate Getty people, was that no value at all was attached to this lost horizon, we called ESPN.

It was as if we had painfully continued to take our medicine over all those years of ownership-and, alas, after all this suffering, it had somehow made us better.

Today, the value of ESPN has been estimated at $18 billion. Broadcast success story of the century? Some say so. I guess it depends on which end you find yourself.

I take my credit, but I continue to believe that the success of ESPN, over time, stems from the succession of ownership. Getty, of course, was the first. And Getty wouldn’t have gotten into it without me. I am confident that Getty would not have stayed in it for as long as they did without me. But realistically, I don’t think Getty, with or without me, could have taken the all-sports network to the level it is today. It wasn’t part of our core business, but if the gusher it ultimately became had happened early on, the future for Getty and ESPN may well have been much different.

Furthermore, when ESPN was included in the sale of Getty to Texaco who, in turn, sold this subsidiary to ABC, ESPN would not have acquired the requisite tough-minded, broadcast mentality. ABC knew what was going on at all times in the sports television business. It wasn’t, as it had been with us, a new project every time. What to do?

Though ESPN was proving its viability, flack still blossomed in the skies for anyone else who associated with it—including Goldensohn of ABC, who writes in Beating the Odds about how the purchase of ESPN came at the wrong time: a time after high revenues, but a time when demands on money for such things as ARTS and Satellite News Channel had drawn deeply into the corporation’s coffers. (p.438)

In view of flat network revenues, he writes: “So now here comes Fred Pierce and says, ‘Leonard, we are going to buy the rest of ESPN—and by the way, it’s losing twenty-five million a year.’” (p.438)

The degree of confusion and resentment that surrounded this thing called sports cable can be seen in another Goldensohn quote: “…when the announcement of our acquisition was made, there was a flood of criticism, not just from our broadcast affiliates. Many said they thought we’d been hornswoggled into buying a pink elephant. Others…called me a traitor to network broadcasting. And still others said I’d lost my mind to spend that much money on anything.” (p.439)

So rancorous were attitudes toward cable that I heard one broadcast executive tell me that cable was a horrible Orwellian scheme, the wired world of government eavesdropping. “Once they’ve got the wires in…” he said, sternly. “Like the telephone?” I said.

Later on, when Capital Cities bought ABC in 1985, ( a coincidence of their early suggestion that Texaco sell ESPN to ABC?), they introduced Chairman Tom Murphy’s trademark, fiscal responsibility, to the combined networks. Limousines, apartments, and airplanes were considered excesses and were no longer common practice. I found this quite interesting, since many of these same budgeting, forecasting, and planning procedures were part of the early Getty-ESPN operating environment. Bill Creasy, a veteran NBC producer who produced ESPN’s opening show, says, “I always tell people that Getty had the courage and vision to start it, and then they sold it to Texaco. And Texaco sold it to ABC. But it wasn’t until Capital Cities got involved, along with it’s Chairman Tom Murphy, that it really got going. They had considerable vision and, most importantly, the deep pockets, too.”

In 1996, the Disney-Capital Cities/ABC merger created even greater opportunities for ESPN. Cross promotions, ownership of professional sports teams, and the opportunity to introduce the entertainment part of ESPN’s name became realities. Movies, reality shows, and other expanded proprietary programming are now prominent in ESPN’s schedule. It wouldn’t be long before other giant corporations and conglomerates moved heavily into the field of broadcasting. In fact, I had often predicted that the rapidly changing economics of broadcasting would attract major corporations. Though often maligned by media critics, it seemed clear to me that the broadcast model couldn’t continue as it had in the past. Westinghouse and General Electric bought CBS and NBC; so now, large corporate entities own television networks.

At the risk of letting my ego climb back in the saddle and whip the horse, I must take credit for the movement toward major corporation ownership, because we at Getty got it all started—that, despite the fact that big mergers are often pooh-poohed by the media—and popular sentiment—which doesn’t bother me. Certainly there are good and bad ones, but the concept is not of itself bad, and it oftentimes—as in the case of ESPN—helps move an entity to a higher level. Finally, I take some pride in that we at Getty helped to introduce a stronger, more consistent business model into the broadcast/communications mix, through implementations in budgeting—and other monetary restraints—as well as that old fogies business practice called forecasting. Oh, that slow-down process of forecasting. Someone else will have to haggle over that. I’m retired.