SBD/January 20, 2011/Media

ESPN Unveils Details For New Texas Network Set To Launch In September

UT's network will air at least one football game among more than 200 events a year
ESPN yesterday formally announced its 20-year partnership with the Univ. of Texas and IMG College to develop a 24-hour network dedicated to the school. The yet-to-be-named net will launch in September. The channel will air more than 200 exclusive events per year, including at least one football game, at least eight men's basketball games and all available games for the women's basketball team and all Olympic sports programs. ESPN will build an on-campus studio for the net, which will produce myriad shows including pre- and postgame programs for all football and men's basketball games. An online broadband companion will offer events not included on the TV network. ESPN will also operate an online site dedicated to Texas high school sports (ESPN). In Austin, Haurwitz & Maher in a front-page piece report ESPN "has guaranteed" the $300M investment, with 82.5% ($247.5M) earmarked for the school and 17.5% ($52.5M) for IMG, which "will sell advertising for the network." ESPN "will own and operate the network and bear production expenses." UT's guaranteed revenue share "works out to $12.4 million a year on average, but payments are expected to run about $10 million a year for the first five years or so and then rise somewhat." The school "has pledged to split the first five years' revenue evenly between athletics and academics." With the new network, UT's total annual broadcast revenue is "poised to rise" into the $30M range. Distribution arrangements with cable operators, "as well as pricing for consumers, are a work in progress." UT President William Powers Jr. said that he "anticipates that the network would be included among some of the basic cable system channels in Texas and Oklahoma, and perhaps in parts of Louisiana." Elsewhere in the country, the network is "likely to be offered as a premium, perhaps part of a sports package or as a stand-alone channel" (AUSTIN AMERICAN-STATESMAN, 1/20).

CONFIDENT ABOUT DISTRIBUTION: ESPN Senior VP/College Sports Programming Burke Magnus said that ESPN is "confident it can reach agreements" with cable distributors "in time for the September launch." Magnus: "Within Texas we will seek the broadest possible distribution, and we think the profile of the university and the content on the network will take care of that for us" (HOUSTON CHRONICLE, 1/20). In Dallas, Barry Horn notes there are "almost eight million cable homes in Texas, which will be the top market for the network." UT hopes to be "on the same pay tier as Fox Sports Southwest and ESPN," which is "where the money from subscribers and advertisers is." FS Southwest and ESPN are in "more than 6.5 million of those 8 million homes." Horn: "I have no doubt that state politics will sway the cable, satellite and telecom providers to place the Longhorn network on viewer-friendly basic digital" (DALLAS MORNING NEWS, 1/20).

QUESTION OF OBJECTIVITY: In St. Petersburg, Tom Jones wrote the "more complicated question" concerning the launch of the network is "whether ESPN's relationship with Texas somehow compromises its overall integrity." Jones: "Can ESPN cover Texas with the same objectivity now that it has a business relationship with the school?" (TAMPABAY.com, 1/19). In Houston, Jerome Solomon asks, "ESPN will do its best to pretend to cover UT objectively, but is that possible now that the mega-sports network has a huge financial stake in the university's success? With conference television packages, you expect networks to be kind to the leagues with which they are affiliated, but this takes it to another level" (HOUSTON CHRONICLE, 1/20).

WILL ANYONE FOLLOW? The Univ. of Oklahoma is continuing with plans to launch its own network, but sports media consultant Kevin O'Malley said that UT is "uniquely positioned to succeed despite the inherent difficulty of creating a new television network." The school's "strong brand, fervent fan base, and location in a large and populous state all work in its favor." O'Malley: "It's probably fair to say that not very many schools would have considered this possibility. Texas may be the institution that could carry it off." IMG College Senior VP & Managing Dir Tom Stultz said that other athletic programs "probably" will not try to replicate UT's plan. Stultz: "You have to have the passion for the university and the number of households in the state to make the numbers work. There will be a very limited number of opportunities to do this, if any" (CHRONICLE.com, 1/19).

CREATIVE WAY FOR UT TO GENERATE MONEY
: In San Antonio, Buck Harvey writes, "Give Texas credit. With education facing so much economic uncertainty, a program already with the nation's largest athletic budget found a way to get more money." It is "creative, all right." If Texas A&M football coach Mike Sherman "has cable in his house, he will likely find he will be contributing a few extra cents in his bill for the Longhorns." It is "marvelous capitalism, albeit in a socialistic system." UT is "doing what others are against" (SAN ANTONIO EXPRESS-NEWS, 1/20). FanHouse.com's Kevin Blackistone noted the deal is "amazing" and said, "We're accustomed to conferences setting up their own networks. Now here we have a school with a $100 million-plus athletic budget setting up its own network. This is the where things are going. ... It's all about the dollars" ("Around The Horn," ESPN, 1/19). In Austin, Kirk Bohls notes UT is "looking after its own self interests," and you "can't fault Texas for maximizing its position in such a populous state with so many potential subscribers." The network will "put pressure on coaches to produce big-time but also give them an unspeakable recruiting advantage" (AUSTIN AMERICAN-STATESMAN, 1/20).
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