SBJ/September 17-23, 2012/Media

SEC, ESPN progress on net

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The SEC’s negotiations with ESPN about a new channel are nearing their final stages, and a glimpse inside the talks reveals that three issues are close to being resolved before the channel’s expected launch in August 2014.

The SEC needs the local TV rights back from the schools to give the channel part of the content it needs. Those rights belong to the schools’ rights holders — IMG College, Learfield Sports and CBS Collegiate Sports Properties — so the SEC must negotiate with them to acquire those rights before launching a channel.

Those local rights amount to one football game per school and roughly six to eight basketball games for each school, plus a host of nonrevenue sports events including baseball, softball and soccer.

ESPN is not likely to partner with another media company on the SEC channel. That leaves Charlotte-based ESPN Regional Television, the ESPN unit that operates ESPNU and manages all of the network-owned bowl games and basketball tournaments, poised to take a significant role in the channel.

Sources familiar with the negotiations say that ESPN Regional Television’s Charlotte office likely will become the headquarters for the new SEC channel because it already has the infrastructure and talent to get the channel up and running efficiently.

Months ago, Comcast reached out to ESPN about the possibility of partnering on an SEC channel, sources said. Comcast was looking into the possibility of flipping its Comcast Sports Southeast channel into an SEC channel, but those talks did not progress. Comcast is the biggest cable operator in the SEC’s markets.

As part of the deal to run the channel, ESPN will take over almost all of the SEC’s marketing rights, giving the network the ability to package its TV ad sales with the conference’s corporate sponsorships.

IMG College holds the SEC’s marketing rights, and the agency could retain some ability to sell corporate sponsorships, but those details have not been finalized. Sources say ESPN ultimately will take over those rights when it completes talks for the channel.

Such a channel eventually will become a cash cow for the conference. But the SEC will have to spend some money first to regain control over all of its live games. CBS and ESPN have the first pick of football games. Those games that are not picked fall into the schools’ local TV rights or third-tier rights package.

As part of the conference’s current arrangement, each team is permitted to televise one football game each season on pay-per-view. Some schools take advantage of that and others don’t. A pay-per-view game at one of the top SEC schools can generate around $750,000 for the rights holder.

CBS has the rights at LSU, while Learfield has Alabama, Missouri, Mississippi State and Texas A&M. IMG College has the rights at the rest of the schools, except for Ole Miss, plus a minority share of the Alabama property.

The Pac-12 had to go through similar negotiations with the rights holders when it started its networks. The league eventually agreed to pay $100 million over eight years to get those local TV rights back.

The SEC’s deal will likely be more expensive because SEC football games are considered the most valuable regular-season property in college sports. But sources say it’s a step the conference has to take to build its live game inventory. Those 14 football games, even if they are the least attractive games on the schedule, plus close to 100 basketball games, will be critical to the new channel’s programming.

The network also will need the baseball, softball, volleyball, soccer and other nonrevenue sports that have to be acquired from the rights holders.

Being able to package TV advertising from the new network into corporate sponsorships will give ESPN a sales advantage when it takes over the SEC’s marketing rights. The SEC’s list of corporate champions includes Allstate, AT&T, Dr Pepper and Regions Bank, while a second tier of sponsors has Aaron’s, Dick’s Sporting Goods, Golden Flake, UPS and eight others.

ESPN Regional also owns the marketing rights to the Big 12. The Pac-12 keeps its rights in-house, while Learfield has the Big Ten, and Raycom Sports markets the ACC.
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