SBJ/May 20-26, 2013/Media

ACC network may stall over rights issues

Don’t expect an ACC-branded TV channel to be launched any time soon.

The biggest problem so far is a rights issue. ESPN needs to control the conference’s syndicated rights to launch a channel. But those rights are tied up until 2027 through deals with Raycom and Fox Sports Net.

“There’s no way an ACC network co-exists with a syndicated model,” said Chris Bevilacqua, a media consultant who worked with the Pac-12 to form a league network. “They’re going to have to get those rights back.”

Just a couple of weeks after the ACC renegotiated its ESPN deal and all 15 schools agreed to grant their media rights to the conference, giving the league the kind of long-term security that will theoretically keep it together, a conference network became a hot topic.

But last week’s annual spring meetings at Amelia Island, Fla., served as a reminder that it’s going to be a long and winding path to get to a channel. There was much more discussion about the prospects for a channel outside the meeting rooms than there was inside, say sources who attended the meetings.

Raycom holds the rights to live ACC football and basketball games, and sublicensed the rights of some to Fox.
Photo by: GETTY IMAGES
With subjects like the future of the men’s basketball tournament dominating conversation, the channel hardly came up, even though ESPN executives Burke Magnus and Dan Margulis attended the meetings, as they typically do.

The week before, ESPN and Raycom engaged in meetings at the Charlotte offices of ESPN Regional Television, but those talks centered on how to program new member Notre Dame, not how to work together on a channel.

Such a league-branded channel is considered vital to the conference’s financial future. The Big Ten, Pac-12 and SEC, beginning next year, all have channels dedicated to their leagues.

But the only commitment ESPN has given the ACC is that it will discuss the benefits of launching a channel. Industry insiders say there is not a rush to put together an ACC channel, and that it likely would be 2016 or 2017 before one would launch, if then.

If, in three to four years, ESPN decides an ACC channel is not financially viable, sources say there will still be financial benefits to the ACC.

The league’s current media rights contract is valued at $260 million a year through 2027, or about $18 million per school on an average annual basis across 14 schools. Notre Dame’s cut is much smaller because the Irish have their own football deal with NBC.

ESPN, if it says no to a channel, would increase its compensation to the ACC, pushing the per-school average to close to $20 million.

The main roadblock is rights. When it signed its ACC deal in 2010, ESPN and Charlotte-based Raycom Sports cut a deal that grants Raycom the ACC’s digital and corporate sponsorship rights, plus a heavy dose of live football and basketball games. Through a sublicensing agreement, Raycom owns the rights to 31 live football games and 60 live men’s basketball games.

Even if the conference is able to buy back those rights from Raycom, a second roadblock remains. Raycom sublicensed 17 of those football games and 25 of those basketball games to Fox, which carries the games on its regional sports networks throughout the ACC footprint. Live local sports programming is important to Fox’s RSNs, and they are not likely to give up those games cheaply.

The games that stay with Raycom make up the ACC’s long-running syndicated package that is distributed to more than 50 million households on over-the-air networks, and reaches 25 of the top 50 U.S. TV markets.

Those deals extend through 2027.

It’s unlikely that ESPN will try to launch a channel without those rights. ESPN brought all of those rights — TV, digital, sponsorship — together as it formed the SEC Network, which launches in August 2014.

“I just wonder if the ACC is a little late to the party,” Bevilacqua said. “They had the opportunity to look at this several years ago and decided not to pursue it, when in fact, that was the more appropriate window. A lot has happened since then, and a lot of other programming services have popped up. There’s even more headwind out there now that makes launching a network not impossible, but certainly harder to do.”

The ACC has made the case that its league is perfectly suited for a channel. It cites figures that show the ACC has more TV households in its footprint, 43 million, than any other conference.

Duke Athletic Director Kevin White, North Carolina AD Bubba Cunningham and Clemson AD Dan Radakovich form the ACC’s TV subcommittee.

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