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SBJ/20101025/This Week's Issue
ESPN makes bid for Longhorns network
Published October 25, 2010
ESPN has countered a bid by Fox Sports to operate a University of Texas channel and is now viewed by industry insiders as a legitimate competitor to partner with the school on a Longhorns network.
ESPN’s pitch has been buoyed by John Skipper, the network’s executive vice president of content, who recently has engaged officials from Texas and the school’s multimedia rights holder, IMG College, in the negotiations.
Though Skipper has not traveled to Texas for these negotiations, sources said he has been more engaged with IMG College, which is handling the bidding process.
While Texas and IMG originally expected to have a network partner selected by the end of the month, sources say the timetable has shifted and likely will move into November. August is targeted for the formal launch of a Longhorns network, with programming from all of the school’s athletic teams on the channel.
IMG also has had discussions with AT&T, DirecTV, Time Warner Cable and Comcast, as well as private equity firms, in its search for a partner to run the new network. But the competition appears to be down to Fox and ESPN, two networks well-versed in launching channels and navigating the travails of distribution.
Representatives from Fox and ESPN declined to comment on the ongoing talks.
Each network brings strengths to the bidding. Fox guarantees instant distribution with its trio of Fox College Sports channels — FCS Atlantic, FCS Central and FCS Pacific — any one of which could be turned into a Longhorns network. Texas officials are said to covet that kind of distribution, which has been traditionally hard to attain for startup networks like this.
The school also is enamored by the strength of ESPN’s brand and believes an association with it will add credibility to a fledgling network. One executive close to the talks said school officials like the cachet of being with ESPN.
ESPN’s value is believed to be in its creative development on the programming side, something school officials deem critical to the network’s long-term sustainability.
Texas’ marquee football and basketball games will go to the Big 12 Conference’s media partners — Fox and ABC/ESPN — leaving, at best, one live football game and a handful of live basketball games for the new network. That means the majority of original football and basketball coverage on the new network would come through shoulder programming and studio shows.
Fox owns the cable rights to the Big 12 through 2011-12 and ABC/ESPN owns the network rights through 2015-16, but any games not picked up by those networks would be available for broadcast to Texas.
The Fox and ESPN bids include a financial investment to start the network and resources to make its content appealing, from sports shows to entertainment programming from the school’s Austin, Texas, home.
Two weeks ago, Fox Sports appeared to be the clear front-runner, but ESPN announced its interest in a big way last week when Skipper took on a greater role in the talks.
Texas Athletic Director DeLoss Dodds has said that Texas will not have an ownership stake in the new channel. Industry sources say a number of ownership scenarios are still being considered. One scenario has IMG College and the media partner creating a network as a joint venture, in which case Texas would receive a rights fee and would not have an ownership stake.
Another scenario exists that involves Texas joining IMG College and the media partner in a three-way deal in which revenue would be shared among them.
Dodds has said that Texas can expect about $3 million in annual revenue from the new network once it’s launched, and the revenue would increase based on the network’s success. The Longhorns are not expected to carry any risk if the network were to fail.