SBJ/March 14-20, 2011/Media

Fox and Big 12 near deal worth more than $60 million a year



On the verge of collapse just months ago, the Big 12 is nearing a cable agreement with Fox that will more than triple the conference’s revenue over its current contract.

The Big 12 and Fox are close to finalizing a long-term deal that will pay the 10-team league more than $60 million a year, well up from the $20 million it now receives from its cable contract, industry sources say.

Fox, meanwhile, has been in discussions with eight of the league’s schools about establishing a conference-specific channel for a handful of football games, up to 60 basketball games and Olympic sports. The channel would not include programming from the University of Texas, which has partnered with ESPN on a new Longhorns channel, or the University of Oklahoma, which is planning its own channel, as well.

Kansas is among the eight Big 12 schools talking to Fox about a college sports channel to carry their events.
The other eight schools, however, have been engaged with Fox about a college sports channel that would carry their events. Fox’s talks, led by the co-president of Fox Sports, Randy Freer, primarily have gone through Learfield Sports, which is the multimedia rights holder for Kansas State, Iowa State, Missouri, Oklahoma State, Texas A&M and Texas Tech. IMG College owns the rights at Baylor and Kansas.

Talks have centered on having Fox flip one of its three Fox College Sports national channels, which are carried on cable sports tiers. Whether the channel could be called the Big 12 Network remains to be seen because only eight of the 10 schools in the conference would be participating. The conference office would have to rule on whether the name could be used in such a venture.

The athletic directors at the schools that would make up such a channel were updated about the negotiations by Learfield executives during last weekend’s Big 12 basketball tournament in Kansas City.

The two arrangements — Fox’s cable deal with the league and Fox’s potential channel with the eight teams — are separate conversations, sources say. Fox’s cable deal with the Big 12 must be completed first so that the network knows how much content is available for a conference channel. The conference office is not involved in the talks about a channel for the eight schools.

“The conference continues to work diligently on our future television rights agreement,” said Big 12 spokesman Bob Burda, but he offered no details on the progress of the talks. Fox executives had no comment on the deals because they have not been signed.

The two developments signify a stark turnaround from last summer, when the Big 12’s future was in doubt as Texas, Oklahoma and others talked about joining an expanded Pac-10.

At the time, one of the Big 12’s marquee schools, Nebraska, had fled for the Big Ten, and another, Colorado, had defected to the Pac-10. Rumors swirled that the six schools in the Big 12’s south division were headed out west, which would have meant the end of the 15-year-old conference, which was created out of the old Southwest and Big 8 conferences.

Commissioner Dan Beebe salvaged the league by promising growth in TV revenue and allowing schools to retain a substantial portion of their media rights, which cleared the way for Texas to start its own network. Once the Longhorns committed to staying, everyone else did, too.

Now the additional revenue from the new Fox cable agreement will be shared by 10 schools, not 12, which would expand each school’s piece of the pie.

The Big 12’s current cable contract with Fox runs through the 2011-12 academic year and will pay the league $20 million in the final season. Terms of the new deal will drive revenue above $60 million and potentially close to $70 million annually for the league.

The conference also has a network broadcast contract with ABC/ESPN worth $480 million over eight years that runs through 2015-16. It was first thought that the Big 12 would extend its cable agreement to 2016 to make it concurrent with the ABC/ESPN contract, but now sources say that the Fox extension will go beyond 2016 and could go out as long as 10 years, to 2022.

The network and cable deals combined will bring an average of close to $130 million a year into the conference to share with the 10 teams, putting the Big 12 only slightly behind the ACC, which recently struck a deal for $155 million a year with ESPN.

If Fox follows through on its talks to create a conference channel for those eight schools, it would aggregate what’s known as the third-tier rights from those schools. The third-tier rights are the games that are not picked up as part of the network or cable contracts, so they drop to the third tier.

Most schools turn over their third-tier rights to their rights holder, like Learfield and IMG College, which televises those games locally or regionally via TV or online and uses them to generate ad revenue.

Under terms of the new cable agreement with Fox, each school will be permitted to retain the rights to at least one home football game and a handful of men’s basketball games. That means a new conference channel would have the rights to a minimum of eight football games total. In men’s basketball, anywhere from six to 13 games per school typically fall into the third tier of rights.

Kansas is considered to have the most valuable assortment of third-tier rights because of its historically strong basketball program and national following.

But while a new channel would significantly boost exposure and potentially aid recruiting for the eight schools, it is not expected to provide a financial windfall. Those schools already are being paid for their third-tier rights in their multimedia contracts with Learfield and IMG College.

By flipping an existing Fox College Sports channel, Fox would save on development and facility startup costs, and would start with a national distribution footprint of between 10 million and 20 million homes. However, the network would either have to pay Learfield and IMG College to obtain programming rights or negotiate a partnership position for them in the channel. The other option would be to create a syndicated network of over-the-air channels within the Big 12 footprint. Bill Byrne, the Texas A&M athletic director, is on the record as supporting the creation of a channel. “I prefer an offering in the form of a Big 12 Network for our fans,” Byrne wrote in his January blog on the school’s athletic website.

A new channel could send repercussions through the league on several fronts, including scheduling. Most of the third-tier football games are against nonconference foes in September. To provide more balanced programming, those games would need to be scattered throughout the season, which means the conference schedule would have to accommodate nonconference games in October and possibly November.

The schools also would have to work with the conference on how conference games are distributed. If Texas plays Texas A&M in volleyball, does the home team get the rights to the game? Can it be simulcast on both the conference channel and the Longhorns’ channel?

And what about the name of a conference channel? Can it be called the Big 12 channel if all 10 of the league’s schools are not involved?

Those are details that need to be ironed out, but it’s clear now that talks are getting more serious and that the idea of a conference channel for eight schools has significant support.

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