SBJ/February 26 - March 4, 2007/SBJ In Depth

Conferences explore TV options

Officials from the major college conferences have stark choices in front of them as their TV rights deals come due.

The mtn., launched by the Mountain West
Conference, has struggled to find distribution.

They can go for the easy money and sell their rights to ESPN, which paid $200 million over the next six years to carry Big East basketball and football games across all of its platforms.

Or they can follow the Big Ten’s lead by setting up their own TV channel, which, if successful, could be worth much more than a rights fee could bring in. The Big Ten still is collecting $100 million over 10 years from ESPN for its bigger football and basketball games. But it set up a 20-year partnership with Fox to start the Big Ten Network, with the conference holding a 51 percent stake.

It’s not an easy choice to make. So far, the two conferences that are launching their own channels have encountered distribution challenges. The Mountain West Conference, which launched The mtn. last fall, does not yet have a deal with a satellite operator. And the Big Ten Network, which still is five months from launching, has yet to cut a deal with a cable company.

“Understanding the risk is not something that can be shortsighted,” said Greg Shaheen, the NCAA’s senior vice president for basketball and business strategies. “Our institutions are in the business of educating young people. … They’re not generally in the business of being in the broadcast business. So this is a shift in the paradigm and each individual institution is going to have a unique comfort level that’s going to have to be settled.”

Key conferences and their TV rights deals


ACC
Football

ESPN through 2011
Basketball
Lincoln Financial/Raycom Sports through 2010-11

Big 12
Football
ESPN through December; Fox Sports Net cable deal through 2011
Basketball
ESPN through 2008

Big East
Football and basketball
ESPN cable deal begins this fall, through 2012-13

Big Ten
Football and basketball
ESPN through 2017; additional basketball contract with CBS through 2009-10 (CBS holds an additional three-year option). The Big Ten Network, a 20-year partnership with Fox Sports Networks, is scheduled to launch this fall.

Pac-10
Football
ESPN through 2011; Fox Sports Net cable deal through 2011
Basketball
Fox Sports Net through 2011-12

SEC
Football and basketball
CBS through 2008-09; ESPN through 2008-09

Sources: SportsBusiness Journal analysis of conference Form 990s filed with the IRS; conference officials

The Big 12 is the next major conference that will be faced with this decision. It has been in an exclusive negotiating window with ESPN for the past two weeks. Neither side was talking about how long that window lasts, or the tenor of the negotiations so far. But ESPN is trying to convince the Big 12 that it has the platforms and distribution necessary to really grow the business.

“Our pitch to conferences is that we are basically one-stop shopping,” said Chuck Gerber, ESPN’s executive vice president of college sports. “We believe that maximizing exposure on all those platforms of ESPN would fulfill all their needs.”

If those deals fail to gain traction, Fox plans to tout its current relationship with the Big 12, which includes exclusive cable rights to the conference’s football games.

“If the Big 12 wants to do a widely distributed sports network, unless they work something out with us, that channel is unlikely to have football,” said Bob Thompson, president of Fox National Cable Sports Networks.

Obviously, Fox is looking to launch channels similar to the Big Ten Network. However, it realizes that the Big Ten’s strategy wouldn’t work for every conference. Some conferences may have the same geographic size as the Big Ten, but only half the number of homes in the territory. Other conferences may not be as popular as the Big Ten.

“Does Conference USA, does the Missouri Valley Conference bring in the types of dollars that would be paid to the Big Ten, the Big 12 or the ACC?” Thompson asked. “The answer’s no. I don’t believe that it precludes someone from going in and figuring out a viable financial model that works for the conference.”

Meanwhile, ESPN is going after those conferences, promising a wealth of distribution on its platforms. When it comes to the midmajors, ESPNU General Manager Burke Magnus finds that the power of ESPN and ESPN2 help him pitch a weekly schedule on ESPNU for smaller conferences.

“It’s not all about the six power conferences,” Magnus said. “They’re going to get a proportional share of the exposure, but more than any time in our company’s history with ESPNU and 360 and streaming on ESPN.com and ESPNU.com, we’re able to create a model for conferences big and small that really works.”

Other major college conferences are content to wait and see how the TV market takes shape. The ACC’s TV contract ends in the spring of 2011, by which time the conference’s commissioner expects to have a better idea about which model works and which one doesn’t.

“We’re all interested in watching the Big Ten Network and seeing how it evolves and seeing how successful it is and how well-received it is by the public,” said ACC Commissioner John Swofford.

Everybody views the Big Ten Network’s distribution as the key. If it’s unable to gain meaningful cable distribution, college conferences appear less likely to launch their own channel.

“When it comes down to having channels distributed, that’s the litmus test in terms of success or failure, which is basically how widely is the channel distributed, at what price and how quickly,” Thompson said.

One aspect of the Big Ten’s deal that the ACC will be looking at, in particular, involves syndication rights. In its new deal, the Big Ten has moved away from regional syndication, which historically has been important to the ACC. In fact, the ACC has had a relationship with its syndicator, Raycom Sports-Lincoln Financial Sports, for the past 25 years.

ESPN touts its multiplatform offerings in securing
rights deals with college conferences.

“We’re not ready to let loose of it at this point,” Swofford said. “We’ll just have to see when the time comes. It’s been very good to the ACC up to this point and still is.”

Still, Swofford said the conference has been looking into launching its own network, a fact that surprises nobody.

“There’s a fiduciary responsibility on the part of the power conferences to take a very hard look at what the Big Ten is doing,” ESPN’s Gerber said. “The presidents demand that. You’re going to have that going forward.”

Magnus believes conferences also need to look at the performance of other single-entity networks, such as the NFL Network.

“Everybody kind of accepts on face value that this category of network is going to succeed,” he said. “That remains to be seen, as far as I’m concerned.”

The NCAA’s Shaheen admitted some growing pains on the part of the conference networks, but predicted that they will grow.

“The jury will take time to come back,” he said. “There had to be a first conference out in doing an innovative and progressive look at this, and the Mountain West chose to be that conference. … They’ll be rewarded in time, and that is really what you have to examine.”

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