Winners and Losers from Pac-10 TV Deal

May 4, 2011 - 0 comments

In our last blog, we used the recent announcement of a new NHL TV agreement as an example of the seemingly insatiable appetite for sports programming. And we tried to give some context as to why this is the case as well as list some of the forces that are driving these prices higher and higher.
Now there’s a new record breaker: the Pac-10′s 12-year, $2.7B deal with FOX and ESPN. This means the Pac-10 is quadrupling the size of its last deal, going from an also-ran to the collegiate leader in TV revenue. If that’s not enough, they also reserve the right to start their own dedicated cable channel, and retain complete ownership. A Pac-10 Network represents another huge revenue stream, worth potentially hundreds of millions of dollars from subscriber fees alone, all of it going directly to the conference. But wait, there’s more; the Pac-10 will also create a digital channel, similar to ESPN 3, that will carry up to 500 events annually. Who knows what upside potential that has in an increasingly digital future.

So, after the dust clears, who are the big winners and losers in all of this? Here are our nominees:

WINNERS

The Pac-10 (duh).

Larry Scott, Pac-10 Commissioner. The new commissioner, who was brought in specifically to increase revenue, got off to a rough start with his unsuccessful attempt to lure Texas, Oklahoma and other Big 12 schools and create a Super Conference with 16 members. At the time, there were reports that he tried to switch out one of the Texas schools for Kansas at the last minute and that blew up the deal. So, instead, the conference had to settle with expanding to 12 schools by adding Colorado and Utah. And many observers thought this might actually result in subtraction by addition, questioning those schools’ ability to offset the need to now split conference revenue 12 ways. With the sheer scope of this deal, Larry Scott (and his vision) have been vindicated; and in a big way.
Colorado and Utah. When the Big 12 recently announced its own new lucrative TV deal, many questioned whether these schools had made a mistake in leaving. As it turns out, each school will be receiving over twice as much in TV revenue as they would have in the Big 12.
ESPN and FOX. They hold serve, protecting a valuable asset. ESPN maintains a major content source in the Pacific Time Zone, thus providing natural fits for those late night time slots over its multiple platforms. FOX maintains a foothold in college football, an area in which they would like to grow their portfolio and holds on to Pac-10 basketball which will help offset the loss of ACC hoops.

LOSERS

Comcast/NBC. Fresh off their success at hanging on to the NHL, they fail in securing an additional asset for the new NBC Sports Group. The soon-to-be-rebranded Versus can’t hope to compete with ESPN with a line-up consisting primarily of hockey and fringe sports. Plus, the numbers on this deal will only increase the expectations of the IOC as Comcast/NBC begins negotiations for the ’14 and ’16 Olympics.
Oklahoma and the “other” Texas schools in the Big 12. They stayed largely because Texas did. But Texas stayed because the Big 12 gave them the right to start their own dedicated network. (For which, ESPN will pay UT $15M per year.) So now Oklahoma, Texas A&M, Texas Tech and Baylor will receive significantly less per year than they would have, even in a mega Pac-16.

So that’s our take. Let us know if you agree or disagree. Either way, we’d like to hear your thoughts.

See you next time.

Post Info

Category: Uncategorized

Tags: