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ESPN Drops Plans for Regional Service

In a stunning about-face for The Walt Disney Co., the
company has scrapped plans for an ESPN West regional-sports service that would have been
anchored by its Anaheim Mighty Ducks National Hockey League and Anaheim Angels Major
League Baseball teams.

Instead, the teams have signed long-term television
agreements for both teams with rival Fox Sports West. The surprising move -- spurred by
fears that few operators would distribute ESPN West -- signals a major retreat from
ESPN's plans to battle Fox Sports Net.

ESPN had planned to launch the new service in October to
compete directly with Fox Sports West and Fox Sports West 2. The network had secured the
rights to the Ducks this season and the Angels next season from Fox Sports as part of a
legal settlement earlier this year and, with ESPN as a backdrop service, it expected
operators to launch ESPN West aggressively.

But ESPN pulled the plug last week, after both teams
expressed concerns that the network would not be able gain adequate distribution, thereby
limiting the teams' fan exposure, sources close to the situation said. As a result,
Anaheim Sports, which represents both teams, decided to enter into a 10-year deal with Fox

A statement from ESPN said that while ESPN West would have
been "a top-quality service ... we respect the teams' interest in having
immediate access to the largest possible distribution, for their benefit and that of their

Representatives from the teams could not be reached for
comment at press time.

"I'm sure that distribution was becoming a
problem," said Kitty Cohen, vice president and general manager of Fox Sports West.

While ESPN West had reached deals with direct-broadcast
satellite services DirecTv Inc. and EchoStar Communications Corp.'s Dish Network, it
has little success with cable operators. ESPN West, which was asking for 50 cents per
subscriber, faced an uphill battle with operators that had limited channel capacity and
that were still smarting over the network's national 20 percent rate increase.

Further, ESPN discouraged operators from putting ESPN West
on digital tiers by charging them $1.50 per subscriber if they did so.

"I'm thrilled; Christmas came early to Southern
California cable operators," said one operator who wished to remain anonymous.
"We're concerned about the costs for two regional-sports services; we
couldn't justify paying for a third sports service."

ESPN insisted that it will "continue to consider
regional opportunities, if they make good business sense," but analysts were

"They're free to bid for [team] rights, but if
they couldn't do it in Los Angeles, where they own two teams, where are they going to
do it?" asked John Mansell, sports analyst for Paul Kagan Associates Inc.