SBJ/June 27 - July 3, 2011/Media

Asking 40 cents a subscriber, Longhorn Network looks to round up distribution

Two months before its planned Aug. 26 launch, the University of Texas’ Longhorn Network is seeking its first distribution partner.

Industry sources say that ESPN, which is selling the channel to cable operators, wants 40 cents per subscriber per month for placement on expanded basic cable tiers in Texas and various markets in three adjoining states: Louisiana, New Mexico and Oklahoma.

At 40 cents, Longhorn Network instantly would become one of the 30 or 40 highest priced cable channels. But the price is relatively low compared with regional sports networks, which frequently command more than $2. A similar channel, Big Ten Network, charged in-market distributors 70 cents for the right to carry its channel when it launched four years ago.

ESPN is far along in negotiations with several distributors, including two of the region’s biggest operators: Time Warner Cable and Verizon. Many don’t anticipate these carriage negotiations to be as bruising or public as Big Ten Network — which went a year after its launch without carriage on Comcast and Time Warner Cable. But distribution talks for new sports channels like Longhorn Network typically go down to the wire. Industry sources expect ESPN to be negotiating carriage deals with operators in Texas right up to the school’s season-opening Sept. 3 kickoff against Rice University.

“Talks are ongoing and productive,” said David Preschlack, ESPN’s executive vice president of affiliate sales and marketing. “We’re in good shape for our launch.”

ESPN appears to have made launching the channel a priority. It has been in talks with Fox Sports Net, which holds the cable rights to Big 12 games, about picking up at least one more Texas football game for the Longhorn Network, sources said. The Longhorn Network now has the rights to just one football game per season. If a deal could be worked out to pick up a second game, Fox likely would seek rights to at least one Big 12 game for its broadcast channel. ESPN holds the Big 12’s broadcast rights.

The Longhorn Network made up a big part of ESPN’s presence at the cable industry’s annual convention earlier this month in Chicago. Basketball coach Rick Barnes and former football player Ricky Williams made appearances at ESPN’s booth and events. ESPN also has launched a website (GetLonghornNetwork.com) to whip up fan excitement as it tries to cut deals with Texas-area distributors. Outside of Texas and its surrounding states, ESPN is seeking sports tier carriage throughout the rest of the country. It has made several of its channels, including ESPN Classic, ESPN Goal Line and ESPN Buzzer Beater, available for sports tiers, which are premium programming packages that require subscribers to pay extra.

In January, ESPN formally announced a 20-year, $300 million deal to own and operate the channel. The contract was negotiated with Texas and the Longhorns’ multimedia rights holder, IMG College.

ESPN’s rights fees flow through the university and IMG College’s cut amounts to 17.5 percent.

IMG College owns the advertising inventory on the channel and has been on the streets since the spring trying to sell ad time. There have been times, industry sources say, when IMG College and ESPN sales teams have jointly approached prospective advertisers, but the ultimate responsibility to move the inventory rests with IMG College.

Scott Willingham, IMG College’s general manager for the Texas property, is leading the sales effort in the state. IMG also has a national sales team that it has been putting in place through the spring, and it will contribute as well.

The distribution duties fall on ESPN, which early on talked with Time Warner Cable about taking a 20 percent stake in the channel. Those talks cooled, though.

There are 7.75 million cable and satellite homes in Texas, according to MediaCensus 2011 from Media Business Corp. Time Warner is the state’s dominant cable operator, with close to 2 million subscribers.

Cable operators are not expecting to cut a deal for Longhorn Network easily. It is a first-of-its-kind network centered on one school, and distribution sources say they worry about a domino effect that could lead to other schools launching similar channels.

Cable operators reacted the same way to Big Ten Network, engaging in bruising carriage fights before launch.

ESPN expects to have leverage from the university’s wild popularity in the state. It will carry up to 200 live events, including at least one football game, up to a dozen men’s basketball games and Olympic sports. It is building a studio in Austin and plans to produce several studio shows, as well. A complete schedule will be revealed later this summer, but the network has announced a nightly news show called “Longhorn Extra” and a pregame show, “Texas GameDay.” It also plans academic-related programming and cultural/lifestyle shows about living in Texas.

“Our pitch taps into the passion of Texas Longhorn fans,” Preschlack said. “It’s not just football and basketball. It’s going to be for all things Texas.”

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