Big Ten Network’s survival story
|The Big Ten Network, which turns 10 this year, set the standard for other college conference channels that followed.
Jim Delany, the Big Ten commissioner, had just launched a TV channel with Fox in August 2007, and it looked like a spectacular failure — at least initially.
The country’s two biggest cable operators, Comcast and Time Warner Cable, went to the mat on this carriage battle and refused to do a deal with the conference channel. Controlling two-thirds of the TV homes in the Big Ten footprint, the two cable operators publicly belittled the Big Ten Network, calling it a niche channel with second- and third-tier sporting events.
“Indiana basketball fans don’t want to watch Iowa volleyball, but the Big Ten wants everyone to pay for their new network,” a top Comcast executive famously told The New York Times in June 2007.
Delany, who was new to the ways of the cable business, responded by doing what he does best. He fought back with the bulldog tenacity he displayed as the basketball team’s captain at the University of North Carolina.
Delany decided that the best way to promote Big Ten Network was to tell its story completely. That led Delany to embark on a tour of Big Ten campuses and state capitals throughout the Midwest, zig-zagging across America’s heartland to visit with legislators, newspaper editorial boards and school presidents.
Mark Silverman, BTN’s president, often rode in the same car with Delany. They used the time to do radio interviews — their dueling conversations overlapping in the background.
During those long drives, Silverman updated Delany on how BTN’s distribution negotiations were progressing, delivering the news in the form of a football score.
“I know we’re losing right now, but how bad is it?” Delany would ask Silverman, who left Disney to start the new conference-branded channel.
“It’s about 31-3,” Silverman said.
“Yeah, but it’s only the second quarter,” Delany responded.
Delany laughs now as he reminisces about keeping score.
“We kept chipping away until we got in the game,” Delany says. “But it was hard. We were hoping we could get through it without any street fights, but the reality was that the network wouldn’t be born without some street fighting.”
The network turns 10 years old this month and those distribution “street fights” seem like ages ago. BTN is now a success story with 60 million households. Financially, it’s been an unquestioned cash cow for the conference, pumping $12 million to $15 million annually into each school’s coffers.
Getting to this point as the first conference channel to survive and ultimately thrive took all of Delany’s grit, and it tested the Big Ten’s cohesion.
“We all got scarred up a bit,” Delany said. “But we take a lot of pride in the way it’s turned out.”
Back in the mid-2000s, business was booming for cable channels and cable operators. Cable was in a big growth mode, and talk of cord cutters and digital video competitors still was many years away.
“Ten years ago, everyone wanted the status quo,” said Steve Greenberg, Allen & Co.’s managing director who became one of Delany’s confidants through BTN’s launch. “Cable companies had a great business model. ESPN had the best business model known to man. Nobody wanted change.”
Some leagues and conferences, though, wanted a bigger piece of that pie.
|Delany’s work on BTN began in 2005, with all 11 schools turning over TV rights to the conference.
It was supposed to go like this: ESPN would give the Big Ten a comfortable increase, the conference would tout to its schools how much more money they were getting and everyone would be happy.
Only this time, the two sides couldn’t come to terms.
“We weren’t in a good place,” Delany said.
ESPN, working from a position of leverage, wasn’t offering the kind of raise Delany, the most powerful figure in college sports even then, thought the Big Ten should get.
“You have to remember that Jim had somewhat of a cynical view of television, and an antithetical relationship with ESPN. There’s no question about that,” said Kevin O’Malley, a former CBS and Turner executive who consulted with the Big Ten at the time. “He felt that ESPN was dominating college sports to an unhealthy degree and that they were financially taking advantage of the conferences.”
Delany began thinking about other options.
He chafed at the way ESPN wrote a check for all of the games, but a relatively small number of them actually made it on air. The rest of the games back then sat in a virtual warehouse, largely unseen.
That provided ESPN with the ultimate flexibility. If a team got unexpectedly hot late in the season, ESPN could alter its schedule to get the best game on because it had all the rights.
“Jim isn’t the type to just roll over and just accept things,” said Bray Cary, a veteran sports TV consultant and one of Delany’s good friends. “He was upset with the way conversations went.”
The Big Ten needed an alternative and Delany, going back to his days as commissioner of the Ohio Valley Conference in the 1980s, was considered an innovator. When ESPN told Delany that it didn’t have a window for any of the conference’s basketball games, Delany wound up creating a Friday night package of games that tipped at midnight, but at least they were on TV.
In 2005, Delany began thinking more seriously about starting a conference-branded channel, akin to the type of channel launched by the NFL and NBA. The Mountain West Conference, likewise, launched a channel — The Mtn. — in 2006, but it didn’t survive the lack of distribution and shut down after six years.
At the time, many considered Delany’s plan little more than negotiating bluster — something solely to get ESPN to pay more.
But Delany said he was deadly serious, and he began researching what it would take to start a channel. He started by convincing all 11 schools to contribute their TV rights to the conference, a shrewd move that flew under the radar at the time.
“You can’t bluff ESPN; they’re too good,” Delany said. “It was possible that we might fail or we might not be strong enough, but it was never a bluff.”
As Delany considered a Big Ten-branded channel, he studied how similar channels launched. He was particularly interested in YES Network, which was kept off some of New York’s biggest cable systems for two years, even though it carried a popular team in the Yankees.
Delany also looked outside of sports. He loved, for example, how Fox successfully launched National Geographic Channel in 2001.
The commissioner solicited feedback from Leo Hindery, the former chairman and CEO of YES Network, and John Fahey, now chairman emeritus of the National Geographic Society, on his idea of a Big Ten Network.
There wasn’t one “light-bulb moment,” Delany said, but a series of conversations that guided him toward launching a network. Most compelling was the idea of creating a channel that would be a long-term asset for the conference, not just a one-off rights deal.
Delany knew he needed consensus among the 11 schools at the time.
“If it’s just one man’s idea, it fails because there’s no foundation,” Delany said, citing the importance of having unanimous support from the conference’s presidents. “But if it’s everyone’s idea, it could succeed.”
What they needed next was a partner.
Once Delany won approval from the schools in 2005, he began building a network of advisers.
Allen & Co.’s Greenberg was one of his first calls. Known as a skilled dealmaker in the media world, Greenberg had experience with several pro leagues and sports teams like the Chicago Bulls and New York Mets. He later advised MLB on the formation of its network, which launched in 2009.
Greenberg immediately bought into the idea. He worked with Brian Bedol years before to launch CSTV, a network dedicated to college sports, and understood the huge bulk of programming a conference like the Big Ten owns.
“The idea of continuing to license the big games to ESPN, but getting a cable outlet managed by the conference to showcase all of those other games, seemed to make a huge amount of sense,” Greenberg said.
Greenberg and Delany became fast friends. They were the same age, they’re both from the Northeast and they both played college sports — Delany was a basketball player at North Carolina; Greenberg played soccer and baseball at Yale.
On early spring baseball trips south, Yale would visit North Carolina for a series of games, which enabled Greenberg to get to know a number of the UNC players, many of whom also were friends with Delany. Later, Delany’s son interned at Allen & Co.
Greenberg and O’Malley, the savvy network veteran, joined Delany and Jon Barrett, the Big Ten’s outside counsel, to form a four-pronged team that attacked the business from all sides.
They wanted to set up a joint venture with Comcast because of the cable company’s strength in the Midwest. After six months of visits to Comcast’s Philadelphia headquarters, though, the cable giant wouldn’t commit.
“Comcast blew it,” O’Malley said. “They were sitting on all of this cash. They were fat and happy, but they just didn’t treat Jim like he had something of importance.
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By the time the calendar flipped to 2006, Fox had become the next target. The conference did not have much of a relationship with Fox to that point, but the Big Ten’s ADs especially were impressed with National Geographic Channel, a well-distributed channel with a global brand.
Most ADs didn’t realize that NatGeo was a majority Fox-owned channel. They liked the way Fox kept the National Geographic brand out front, which is what the Big Ten wanted. It was not going to launch a BTN Fox or a BTN ESPN channel.
Delany struck up a friendship with Fox Sports COO Larry Jones. The timing couldn’t have been better. Fox had an on-again, off-again love affair with college sports. Fresh off its win against ESPN for rights to the BCS championship, Fox was back in love with the college space.
At a spring 2006 meeting with Delany and Big Ten ADs in Chicago, Fox impressed by bringing most of its decision-makers to the meeting: News Corp. President and COO Peter Chernin; Fox Networks Group President and CEO Tony Vinciquerra; Fox Sports Networks President Bob Thompson, COO Randy Freer, Executive Vice President David Rone, and Senior Vice President Mitchell Chun; and Jones. To the Big Ten, it was an impressive show of force.
One of the key selling points was Fox’s ownership of DirecTV, which brought with it 15.4 million households. As it turned out, DirecTV was the first distributor to sign a deal for the Big Ten Network well before the channel launched.
After the meeting, a large group dined at an Italian restaurant called Carlucci and the framework for a partnership was under construction.
By the time Fox and the conference announced their joint venture in June 2006, Silverman was curious. Five months later, Fox hired him to run BTN.
“The combination of Fox being the major network behind this, with this kind of content, I felt like this was going to work,” Silverman said. “It may take some time, but I was very confident.”
Knowing he had just nine months until the network’s August 2007 launch, Silverman had distribution battles to wage, more than 100 people to hire, a headquarters that had to be constructed out of an empty warehouse and, oh yeah, what’s going to be on the network.
“It was a massive amount of work,” Silverman said. “It was great, though. Things were moving well for several months. I felt like we were moving at a good pace.
“Once we started having a couple of affiliate meetings, I got the sense that this wasn’t going to be easy. It was going to be more difficult to gain distribution than I thought.”
The early distribution meetings produced a cordial “No thanks” from Comcast and Time Warner, as expected. Mediacom was particularly unhappy, so much so that Rocco Commisso abruptly walked out of the meeting, Silverman said. His main complaint was that some of the games that used to appear on ESPN were shifting to BTN. In Mediacom’s view, that meant it was paying twice for the same games.
Cable company executives also worried that BTN would be the start of a trend. If they gave in to BTN, other conference channels could form and cable companies would have to pay for them too. Sure enough, the SEC and Pac-12 created channels following BTN’s launch. The ACC is expected to launch its own channel in 2019.
During one of his many campus visits in 2007, Silverman was sitting in a hotel room when he received a call from a reporter. The heads of distribution for Comcast, Time Warner and Cox all were on the record as saying that they would not carry the network.
“That floored me,” Silverman said. “I had those meetings. I knew they weren’t happy, but the Time Warner one showed promise. I was not ready for that kind of comment because it was so out of left field.
“After that, things went to 100 degrees right away. The articles started popping up. The PR machines went in motion. And not ours. I was really caught flat-footed by the intensity of the PR coming out against BTN in a very public way. We really felt behind the eight ball.”
Meanwhile, Fox’s Thompson was hammering Silverman to produce the best content once the channel was on the air. It helped that BTN’s first football game on Sept. 1, 2007, Appalachian State’s 34-32 stunner over No. 5-ranked Michigan, became known as the greatest upset in college football history and helped legitimize BTN. Thompson called it “a game sent from the heavens.”
“The one thing I continuously preached to everybody — Silverman took the brunt of this once he came on board — was that we can’t give distributors an excuse that the network looks like crap on the air,” said Thompson, retired now. “When you go through an affiliate fight, you don’t want to have poor products and a poor look to give them something to rail about in the press.”
The temperature wasn’t just heating up in BTN’s Chicago office. It was white hot on the 11 campuses as well.
When BTN launched in August 2007 without deals from Comcast and Time Warner, fans were irate. Athletic directors were forced to come up with PR plans and messaging to help their fans understand why they couldn’t get the channel and what they could do about it.
“We’d be walking into a stadium during that first season and fans would boo us because they couldn’t see the network,” BTN and Fox analyst Charles Davis said.
“We got a lot of criticism,” Wisconsin AD Barry Alvarez said. “It created some doubt. We had a professor on campus who supposedly was a media expert and he was very vocal about how foolish we were.”
Delany’s job as the distribution talks became more heated and more public was to keep the conference together. The Big Ten’s presidents voted unanimously in favor of starting the network and now they had to hang on through the ups and downs of getting it distributed.
Some, like Gordon Gee, the Ohio State president at the time, were adamant that they didn’t want to go through a second season with no carriage in Ohio, Michigan and other core Big Ten states.
“Those were some contentious meetings,” Thompson said.
At the time Fox’s affiliate group included Mike Hopkins, who is the current CEO of Hulu, and Mike Biard, who is now running Fox’s distribution group. They negotiated the deals behind the scenes, while Delany was the public face of the network and much of the pressure from the schools fell on his shoulders.
“At one point,” Thompson recalled, “Jim called me up and said, ‘I think I might have just gone over the edge.’ That’s when he had made a statement to some paper that really stirred the pot. He realized that he made a mistake and promised from then on that he would go radio silent. And he did.”
Martin Jischke, the former Purdue president, chaired the Big Ten board at the time.
“We knew there was risk if we couldn’t get these deals done,” Jischke said. “But Jim was so steadfast. I remember thinking that we were very lucky to have Jim because of his knowledge of the media industry. He kept us informed and that kept a lot of people calm through the tough times.”
Through 2008, the distribution deals finally began falling into place. Cable companies didn’t want to go through a second football season with unhappy customers.
Comcast signed BTN in June 2008, and Time Warner took the fledgling network in August 2008, literally on the eve of the college football season. That gave BTN full distribution in its footprint.
“It was a relief, a welcome relief,” Delany said. “It was gratification that the network was no longer on its way. It was a distributed, successful network.”
There was never any guarantee that BTN would be a success. Current examples like the Pac-12 Networks and Spectrum SportsNet LA, the home of the Dodgers’ broadcasts, continue to struggle with distribution.
What BTN had working in its favor was that it had a fan base willing to loudly complain, and that the conference stayed committed and didn’t fracture.
“The Big Ten was a natural to be first,” O’Malley said of conference channels at the power five level. “They had populous states in Ohio, Pennsylvania, Michigan, Illinois — something like 25 percent of the country in its footprint.”
But being first also “was much tougher,” Greenberg said. “What Jim did, though, was to get all of his schools to contribute their rights to the conference. The hardest job in any league is getting the teams with the most value to share equally with teams of less prominence. Jim cut through that early on.”
Delany also had the foresight to keep BTN separate from other TV rights deals. While the SEC negotiated its primary TV rights and the SEC Network into one 20-year agreement with ESPN, the Big Ten has always kept those deals in silos.
That’s what enabled the Big Ten recently to do a six-year rights deal with Fox, ESPN and CBS for a combined $2.64 billion, making it the richest annual college rights fee. The short-term nature of the deal means the conference will be back at the negotiating table again in 2022-23, before any of the other power five leagues, presumably for another raise.
“By going first, certainly it was tough, certainly we learned some lessons, but if you go the easier route, you pay for it in other ways,” Delany said. “The SEC did a deal with ESPN for 20 years; that’s how they got a network. The ACC, if they get a network, it’ll be owned by ESPN. I like the model we have. We were able to marry our tradition with innovation and create something that hadn’t been done before.”