SBJ/Sept. 16-22, 2013/Colleges

Pac-12 keeping networks’ ownership to itself

Emboldened by a modest profit in the first year of its conference-owned network, the Pac-12 is standing firm that its seven channels are not for sale and the conference is not seeking investors.

The Pac-12’s national network and six regional channels represent the only college network that is owned solely by the conference. Fox owns 51 percent of the Big Ten Network, while the SEC’s network, set to launch in August 2014, will be owned by ESPN, which also owns the Longhorn Network.

That’s not to say the conference will never take on investors, but Pac-12 officials simply don’t see a need to now.

“That’s something we’re always going to pay attention to, but we’re in a wonderful position now,” said Ed Ray, president of Oregon State who has been chair of the league’s CEO Group the last two years. “Right now, we own 100 percent of the equity and we control all of the programming. That’s a good place to be. Nobody got rich off of it, but we had a good first year. We covered our costs, and we had a modest plus amount in the balance at the end of the year. That’s a good sign for the future.”

Ray defined modest profit to be in the “low millions.” That money went into the bank and has not yet been distributed to schools. Ray said the conference’s presidents want to make sure the networks are on firm financial footing before distributing profits.

He expects the presidents to discuss distribution of profits at their next meeting in October.

Earlier this year, however, conference officials did hold talks with several suitors, including ESPN and Fox Sports, according to several industry sources. The talks progressed to a level where ESPN and Fox Sports executives looked over the networks’ affiliate deals, sources said, but the talks didn’t progress from there.

Those sources say that the conference has not had any contact on such a deal in months.

“We’ve had people approach us at various times expressing an interest,” Pac-12 Commissioner Larry Scott said. “But we’ve got no interest at the moment in taking on any investors.”

The Pac-12 Networks’ distribution struggle with DirecTV has been well-chronicled, including a public relations campaign from the conference urging its fans to drop the satellite provider. Network officials last week acknowledged that talks are “at an impasse.”

“It’s inexplicable that DirecTV hasn’t picked up the Pac-12 Networks yet,” said Lydia Murphy-Stephans, president for Pac-12 Networks.

The conference is negotiating with Verizon, talks that may become more ticklish in the wake of the conference’s recent sponsorship and carriage deal with AT&T U-verse.

The Pac-12 also has a similar sponsorship and carriage deal with Dish Network.

“Verizon had an opportunity to negotiate a comparable deal before it was done with AT&T,” Murphy-Stephans said. “They would have stepped up, we believe, if they were interested in the sponsorship. I don’t think it will have a negative impact at all.”

Scott gave a full-throated defense of Pac-12 Networks’ business plan, saying that he expects profits to only increase in the future, while also providing the conference with the type of exposure it’s never enjoyed before.

The Pac-12 will not say how many households the networks are in.

“We really like being masters of our own destiny,” Scott said. “It’s really important for us to maintain control. We can certainly afford financial independence. We have no need for significant investments right now. It’s not something of interest to us and it’s not something that we’re discussing with anyone.”

The conference televised 550 live events last year and will increase that to 750 this season and 850 in 2014-15.

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