SBJ/July 25-31, 2016/Media

ACC Network to debut in era of cost-cutting

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Several distribution executives responded with pessimism to last week’s news that ESPN plans to launch an ACC Network in three years, suggesting that ESPN is going to have a hard time convincing cable and satellite operators to take the planned channel. Speaking on background because they have yet to even start negotiations, the executives said the launch of a new sports service flies in the face of the industry’s trend of providing lower-cost tiers of programming.

Sources say ESPN plans to counter that argument by focusing on the popularity of ACC sports, which is home to some of the best teams in college football (like Clemson and Florida State) and basketball (like North Carolina and Duke).

ACC Network’s first test comes next summer when ESPN starts negotiating a new affiliate deal with Altice, a negotiation that promises to be a tough sell since the cable operator has systems near New York City, which is a long way from ACC member Syracuse and not really part of the conference’s footprint. One of the few cable operators that does not carry SEC Network, Altice has been public about its desire to cut costs.

ESPN could cut individual ACC Network deals, but most programmers and distributors like to wait until their big affiliate deals expire — and ESPN’s biggest ones aren’t up until several years after ACC Network’s planned 2019 launch. ESPN’s affiliate deals with Comcast and Charter expire in 2021; ESPN’s Dish Network deal runs until 2022.

Sources expect ESPN to price the ACC Network similar to SEC Network, which at launch was around $1.30 per subscriber per month in-market and around 25 cents per subscriber per month out-of-market.

But the sports media market has changed dramatically since SEC Network launched in August 2014. ESPN has lost more than 6 million subscribers since that time, according to Nielsen estimates. Plus, cable operators have become more emboldened in carriage fights with sports networks, such as Comcast, which allowed YES Network to go dark on its Connecticut systems, and DirecTV, which has yet to cut a deal for either Pac-12 Networks or SportsNet LA.

— John Ourand

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