Fox Sports has emerged as the front-runner in the competition to partner on the University of Texas’ fledgling TV network.
IMG College, the Longhorns’ multimedia rights holder, has been in talks with a number of potential partners for several months including Fox and ESPN, industry sources said. IMG is still engaged with ESPN, but a deal between the two is considered more of a long shot, as Fox has emerged as the favorite.
IMG College and Texas intend to select a partner by the end of the month, sources said. The structure of that partnership could take many different forms, but that won’t be determined until after a partner is selected.
Distributors, including DirecTV, AT&T and Time Warner Cable, as well as private equity investors, have had discussions with IMG College about the possibility of partnering with the agency on the channel.
Sources indicate that the selection process began to narrow in recent weeks, and Texas Athletic Director DeLoss Dodds has said recently that three entities had been in serious discussions and that a leader had emerged, although no deal is complete.
A Longhorns network is expected to launch formally in August 2011 with programming from all of the school’s athletic teams. That’s where Fox has an advantage, sources say, because it already owns many of the TV rights that a Texas channel would need, including football and Olympic sports, through FSN’s agreement with the Big 12 Conference.
The programmer also operates several channels in Texas, including FS Houston, FS Southwest and Fox College Sports. Fox could conceivably flip one of those channels into the Texas channel without reopening any existing deals with operators, guaranteeing the new channel significant carriage throughout Texas at launch.
ESPN, on the other hand, would have to launch a channel from scratch and try to win carriage on Time Warner Cable, the state’s dominant cable operator. That would mean reopening an agreement that ESPN signed with Time Warner just last month at the conclusion of an all-consuming and rigorous negotiation for all of ESPN’s channels.
Fox also has experience in partnering on channels, such as the Big Ten Network; ESPN does not, at least not domestically.
Texas and IMG are looking for an established media partner to help them successfully launch a channel and Fox and ESPN have experience negotiating carriage deals with cable and satellite operators. Plus, they have programming, production and ad sales expertise that IMG and Texas can use once a channel is launched.
Texas has requested that the Big 12’s next TV arrangement allow the school to retain the rights to at least one home football game that it could televise on its own network. A live football game and a handful of live men’s basketball games would significantly enhance the value of the channel.
While Dodds has said in the past that Texas will not have an ownership stake in the new channel, industry sources say a number of scenarios still are being considered.
One scenario has IMG College and the media partner creating a network as a joint venture, in which case Texas would receive a rights fee and would not have an ownership stake. Another scenario exists, though, that involves Texas joining IMG College and the media partner in a three-way deal in which revenue would be shared among them.
Dodds has said that Texas can expect about $3 million in annual revenue from its share of the network, if it has an ownership stake, or in rights fees once the channel is launched. Revenue would then increase based on its success. The Longhorns are not expected to carry any risk if the network were to fail.
The multitude of possibilities is one of the reasons the network’s creation has taken so long, sources said. IMG College and Texas have been at work on this project for about three years.
The timeline for selecting a partner has finally come into focus, sources said, and the process is expected to be completed in the next two weeks. From there, the partners will move forward with gaining clearance for a launch by next August and possibly a soft launch even earlier.
Programming for the channel will include live and taped Longhorns sporting events, shoulder programming around those sports, archived games, academic programming and possibly non-sports, lifestyle programming with a focus on the city of Austin, especially its rich music culture.
