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SBJ/May 21-27, 2012/Media
SEC media talks revolve around possible cable channel – again
Published May 21, 2012, Page 1
Conference administrators are expected to receive an update on the progress of those talks next week in Destin, Fla., when the SEC holds its spring meetings.
The 14-team conference has been negotiating with both networks this year after the SEC expanded with Texas A&M and Missouri. That triggered a clause in the SEC’s deal that allows the league to go back to the negotiating table with its partners, just as the ACC recently renegotiated its media contract with ESPN after its own expansion with Pittsburgh and Syracuse.
The bigger negotiation is with ESPN, and talks appear to revolve around an SEC-branded cable channel that could launch as early as 2014. ESPN’s current arrangement with the SEC — negotiated in 2008 — pays an average of $150 million a year over 15 years.
When the SEC did this deal with CBS and ESPN four years ago, it was considered a groundbreaking agreement. The deals reset the entire collegiate media rights market, at least until the Pac-12 negotiated its massive deal with ESPN and Fox last year.
The original 15-year deal between ESPN and the SEC granted ESPN all of the rights that CBS didn’t take as a way to prevent the SEC from starting its own channel. Now, discussions on a conference channel, of which ESPN would be a partner, are running concurrent with the rights fee negotiations.
It remains to be seen if the SEC will be an equity partner in the channel, like the Big Ten, or if the conference will simply sell the rights to ESPN for an additional fee.
There are several different paths the SEC could take on a channel. It could follow the Big Ten model, where the conference is a 49 percent owner of Big Ten Network with Fox and shares in its revenue. Or it could go the Pac-12 route, which owns all of its regional networks. Texas, on the other hand, sold its rights to ESPN for a fee and ESPN owns all of the Longhorn Network.
All of those models are believed to be in play for the SEC, but any channel couldn’t be launched until 2014 at the earliest, when ESPN gets back syndication rights it sublicensed to regional sports networks operated by Fox Sports and Comcast. A decision on whether to go forward with a new SEC-focused network would be made by the SEC-member university presidents and ESPN. A final decision on a network will be made by ESPN in conjunction with SEC Commissioner Mike Slive and the presidents.
Sources think the conference will reach an agreement with CBS first. Those sources familiar with the discussions predict that CBS will wind up paying a prorated increase or slightly more to the SEC.
The network has balked at paying any type of significant increase, sources say, arguing that the addition of Missouri and Texas A&M does not change its deal.
CBS’s deal with the SEC, negotiated in 2008, pays an average of $55 million a year to the SEC over 15 years. A prorated increase would take the value of that deal up to $65 million a year. The SEC could generate additional revenue by adding more years on the end of the contract.
CBS still will carry the same number of football games each season as part of its package, and network executives are arguing that schools such as Alabama, Florida and LSU — not Missouri and Texas A&M — drive the value of the conference. Without additional inventory, CBS’s stance has been that it shouldn’t pay more solely because the conference added two new schools.
Clearly, the SEC can argue that the collegiate market has been reset since the deal was negotiated four years ago. The Pac-12’s deal with ESPN and Fox for $250 million a year over 12 years — agreed to last year — has been a game-changer for conferences that have expanded and gone back to the negotiating table.
The ACC and ESPN just signed off on a new agreement that took their one-year-old contract from an average of $155 million annually to $240 million, while adding four years and granting the network more games and marketing rights.