The Southeastern Conference has completed the buy-back of its TV, digital and sponsorship rights from third parties, clearing the final hurdles to launch its TV channel with ESPN next year.
The conference and ESPN will make a formal announcement on the yet-to-be-named SEC channel, which will launch in August 2014, at an event Tuesday in Atlanta.
Like the Big Ten Network and Pac-12 Networks, the SEC’s version will be a national channel, with broad distribution within the SEC’s territory and sports-tier carriage elsewhere. Over the next 15 months, the conference will work with ESPN to build out its operation, possibly in Charlotte at ESPN Regional Television, and hire a staff, all while beginning talks with distributors.
The conference channel cleared its biggest obstacle in recent weeks when it reacquired the third-tier TV rights from IMG College, Learfield Sports and CBS Collegiate Sports Properties, the three rights holders that work with the conference’s 14 schools. Those third-tier TV rights represent one football game, eight men’s basketball games, baseball, women’s basketball and all other nonrevenue sports that are not picked up by ESPN or a syndicated partner.
Those live games will move to ESPN for the conference channel, which is an important development because it means that ESPN will control the entire inventory of SEC football games, with the exception of CBS’s single game each week. That gives ESPN a lot of flexibility to use specific games in markets where it’s having trouble gaining distribution. If, for example, one of Louisiana’s biggest distributors, Cox, is holding out and not agreeing to carry the channel, it will be easier for ESPN to place more LSU games on it to help it gain more leverage in those negotiations.
Such leverage is important, as negotiations with distributors have been the most difficult part in the launch of college conference networks. The Big Ten Network went through bruising carriage battles, particularly with Comcast and Time Warner Cable. The Pac-12 Networks still has yet to cut a deal with the nation’s biggest satellite distributor, DirecTV.
The value of the third-party rights the conference bought back is significant and comes after nine months of off-and-on negotiations. The rights holders agreed to give up TV rights valued at roughly $15 million a year. In return, those rights holders will lessen the guarantees to their schools by the same amount — a little more than $1 million a year for each school — for the next several years, industry sources said.
The conference also gained control of its digital and sponsorship rights that will be rolled over to ESPN as well. That will enable ESPN to have TV, digital and sponsorship rights for the conference under one umbrella. Being able to package TV and digital advertising in corporate sponsorship deals is considered a vital revenue component, and neither the conference nor ESPN wanted multiple partners selling those rights in the marketplace.
Digital rights for the SEC are coming back from XOS Digital, the company that created the SEC Digital Network in 2009, for an undisclosed sum. The SEC’s corporate sponsorship program has been sold and managed by IMG College in the past.
ESPN Regional will oversee the corporate sponsorship program. ESPN Regional also runs the Big 12’s sponsorship program. Ben May, general manager for IMG College’s SEC property, is considered a leading candidate to move with the sponsorship program over to ESPN Regional.
“The conference and the schools will be strengthened by this new arrangement,” IMG College President Ben Sutton said of the SEC. “It was a very productive negotiation. There’s always a little pain along the way, but both sides worked really hard to get this done.”
Sutton and Hunter Nickell, IMG College senior vice president, negotiated on behalf of the rights holders, since IMG College has the most schools in the conference at 10.
In an interesting twist, Tom Stultz of JMI Sports represented the SEC on the negotiations. A former executive at Host Communications and IMG College, Stultz actually wrote many of these multimedia rights contracts from the other side of the table. He parted ways with IMG at the end of 2011 and later joined JMI Sports.
SEC Commissioner Mike Slive, executive associate commissioner Mark Womack, and associate commissioners Mark Whitworth and Charlie Hussey were at the table for the conference. ESPN executives were not part of these talks, even though the network will benefit. The SEC said it would not comment on the network until a formal announcement is made.
The negotiations for third-tier TV was similar to what the Pac-12 went through when it bought back its third-tier TV to start the Pac-12 Networks in 2012. Even though the third-tier football and basketball games generally consist of the least attractive matchups, they have value to the conference networks because they represent live programming. That’s especially the case for the SEC, which typically draws the highest regular-season TV ratings in college football.
Meanwhile, ESPN is in the process of regaining its syndicated rights from Comcast SportsNet and Fox Sports Net. Both RSNs currently buy SEC games from ESPN. The syndicated deal with Comcast SportsNet ends after the 2013-14 school year. The deal with Fox ends after the 2014-15 school year.
Sutton said the new arrangement will not mark the end of IMG College’s relationship with the SEC. The company will continue to manage multimedia rights for its existing partners in the league — Arkansas, Auburn, Florida, Georgia, Kentucky, Mississippi, South Carolina, Tennessee and Vanderbilt.
Those multimedia rights include radio, individual school corporate sponsorships, signage on campus, hospitality and other promotional assets.
Alabama’s property is a joint venture between Learfield and IMG College. Learfield also has properties at Mississippi State, Missouri and Texas A&M. LSU works with CBS Collegiate Sports Properties.
In the past, IMG College, CBS Collegiate and Learfield exploited the third-tier TV rights by broadcasting games on a pay-per-view basis and packaging TV advertising into sponsorship deals. Those TV rights were more valuable at some SEC schools than others. Arkansas, Florida and Kentucky were among the schools where third-tier TV rights generated the most revenue.