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Volume 21 No. 1
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Pac-12 buys back rights, clears way for new channel

BEHIND THE STORY: College reporter Michael Smith
on how the Pac-12's move will affect its business
partners, and what it might mean for other conferences.
The Pac-12 has completed a complex six-month negotiation to acquire key TV, digital and sponsorship rights previously held by multimedia rights holders IMG College and Learfield Sports. The deal, which will require the conference to pay IMG College and Learfield roughly $15 million a year for the rights, clears the way for the launch of the Pac-12 TV channel next year, while also putting the conference in control of vital distribution categories, including wireless and multiplatform video distributor.

The new arrangement positions the conference to put all TV, digital and sponsorship rights owned by the conference under the Pac-12 Enterprises banner, making it the first league to control and bundle all of those rights. Pac-12 Enterprises President Gary Stevenson will oversee the integration of those rights.

Said Pac-12 Commissioner Larry Scott: “We want to control the relationship with distributors at every level.”
“It was a very good discussion and what we got is exactly what we laid out for IMG and Learfield at the start of this process,” said Pac-12 Commissioner Larry Scott.

On the surface, the key to the deal appeared to be convincing IMG College and Learfield to relinquish third-tier TV rights, which in the past have been controlled by the school or its rights holder. Third-tier TV rights represent the live games that are not picked up by the Pac-12’s primary media partners, Fox and ESPN.

But Scott stressed the importance of acquiring the digital and sponsorship rights in the highly coveted wireless and multiplatform video distributor categories. Examples of wireless companies are AT&T, Sprint and Verizon, while the MPVD category includes distributors such as Comcast, Time Warner, DirecTV, Google and Netflix.

Greg Brown, Learfield’s CEO, called those categories among the most valuable a school has.

“When you talk about putting all of those rights together, you’re talking about a very substantial category,” Brown said. “Putting them all under one umbrella makes a lot of sense.”

Scott said it was imperative for the conference to own the sponsorship rights to any category that has the ability to distribute content. Being able to package those rights for content and sponsorship puts the conference in a position to sell a hybrid deal, similar to what the NFL did with Verizon for both content and sponsorship rights.

“We want to control the relationship with distributors at every level,” Scott said. “This enables us to tie together conference and school sponsorship assets for a company interested in content. It also will help us prevent ambush and offer exclusivity to a partner.”

Scott envisions a Pac-12 Web network similar to the professional leagues, with a single conference portal providing a link to each of the school’s websites. The Web network will begin to take shape next year, but it will take years before all of the schools come on board. Each of them has contracts with technology platform partners such as College Network and NeuLion that must expire first.

When those deals expire, the conference essentially will take their place and become the service provider for the school.

Each school will retain its own content and look on the site, Scott said, allowing them to maintain an identity of their own within the network. But the creation of a single conference portal to those sites will give the Pac-12 the ability to aggregate traffic numbers and increase revenue.

“The consolidation of all these digital rights allows us to have a common platform for all of our schools,” Scott said. “It improves traffic and it improves our offerings to sponsors and advertisers.”

Terms of the arrangement between the Pac-12, IMG College and Learfield were not released, and all sides said the agreement was too complicated to assign a dollar value. But industry sources said the conference will pay in the neighborhood of $15 million a year initially for those rights. IMG College owns the multimedia rights to seven schools in the Pac-12, while Learfield has three.

That dollar value will decrease year over year as those multimedia rights contracts are renewed or expire.

“It was an extremely complex process that really could have become unpleasant if all sides had not been above board and transparent about it,” said IMG College President Ben Sutton. “How you harmonize all of these rights is a very difficult proposition and at times there were 15 or 16 parties represented. I believe what the conference is doing will ultimately complement very well what we’re doing.”

With the local TV rights to all 12 schools, the conference has taken a major step toward securing the live-game inventory it needs for a channel. The conference’s primary media partners, ESPN and Fox, usually take the first selection of football and men’s basketball games, but any games not selected by those two networks fall into what’s called third-tier TV rights, or the local rights.

That can mean anywhere from one to three football games a year per school, and six to eight men’s basketball games a year per school. Without those live games, the conference wouldn’t have the inventory to fuel a network.

In total, the conference said third-tier TV rights will account for 33 football games this season.

Scott set this plan in motion more than a year ago when he asked all 12 schools to commit their TV and Web rights under a conference umbrella for 15 years. Those aggregated rights gave the league the impetus to move forward with plans for a channel and a centralized digital platform.

As part of the deal, the conference returned satellite radio rights back to the schools and their rights holders. Rights for the radio network and non-live TV, such as coaches’ shows, will remain at the school level.

IMG College and Learfield are expected to produce some TV programming for the conference channel.