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UGA And UF Presidents Talk Potential SEC Network

It’s called “Project X” around the SEC office.  It’s the new — potential — partnership between ESPN and the SEC on an SEC-branded television channel that could launch by 2014 or shortly thereafter.

Project X got tongues wagging last week in Destin and one of those tongues belonged to outgoing Georgia president Michael Adams, who sounded a bit like a man trying to work in an “I told you so.”

 

“We’re strong enough in the marketplace that I have long advocated for an arrangement (in which) we look for a media partner where we would own at least 51 percent of the deal and create a network.  I raised that issue when we did the last TV deal (in 2008), but I was a minority view at the time.”

 

So what’s changed between 2008 and 2012?  Plenty.

In ’08, the Big Ten Network was struggling.  That conference was fighting to get cable clearance across the country (just as Texas’ Longhorn Network is currently fighting for cable placement).  But soon after the SEC inked its deals with CBS and ESPN — which has provided a greater amount of national coverage for the league — the Big Ten got wise.  Jim Delany’s league partnered with Fox and suddenly their channel — now packaged with other Fox properties — began to get more and more clearance on more and more cable outlets.  And that’s meant more and more money for Big Ten schools.

Or as Florida president Bernie Machen put it:

 

“We (the SEC) sort of broke ground on major media contracts, and I think the others have followed along and actually moved the ball a little bit further.”

 

So now, four years later, the SEC is talking with ESPN about a new cable network.  Question is: Has the league already missed its best chance?

With the global economy far from healthy and with additional sports cable channels launching every day, the sports cable channel bubble might soon be on the verge of bursting.  ESPN has had troubles getting the Longhorn Network on cable systems in UT-mad Texas.  What might they be thinking, then, about creating another new property with the SEC?  When they already own the rights to SEC games through 2023-24 anyway?

While that’s the potential negative, there is a positive.  A huge portion of Big Ten revenue is derived from its network.  The SEC gets its biggest bucks from the two network deals it signed back in ’08 (plus college sports greatest amount of national exposure).  So an SEC Network wouldn’t necessarily need to produce as much cash as the Big Ten Network just to keep the SEC on par or in front of Delany’s league financially.

Obviously, the goal would be to break the bank and considering the number of cable households now within the SEC geographic footprint as well as the league’s overall brand equity, that goal could certainly be met.  But if ESPN fears now’s not the time to go all-in with yet another network, it would be possible for both parties to scale back their goals and simply look to accentuate their income, not double it, triple it or more.

As is the case with nearly every financial comparison made between leagues, schools and networks, we’re not talking about an apples-to-apples comparison here.  Example: If you make $10 milion per year (with eight of that coming from your own network) and I make $11 million per year (with 10 of mine coming from outside contracts and just one coming from my own network), I’m still bringing in more cash than you are overall.

So comparisons between real Big Ten Network revenue and potential SEC Network revenue should always be viewed through the lens of each league’s overall intake.  And if ESPN is a little skittish these days about going all-in on yet another new network — in this economy — it’s possible both the the four-letter network and the SEC could dream up a smaller-scale plan that would in the end be more cost-effective than launching a full-fledged network.

There are always many, many options on the table.

 


2 comments
AllTideUp
AllTideUp

I think the drive toward more sports networks and more sports coverage in general has been mostly the result of new technology.  DVR now allows people to skip commercials and watch their favorite programs at more convenient times.  Internet streaming, whether it's Netflix or Hulu, has removed traditional advertising as well.  You can now watch your shows on-demand(sort of) online and you don't have to pause for commercial breaks.And since ad revenue funds TV networks, the advertisers are shifting their focus to live broadcasts.  Most people don't want to watch games that are recorded.  They want to know the results in real time, experience the moment, and maybe watch them at a social gathering too.  So now, these broadcasts have become the most valuable for advertisers.  That's one of the main reasons there is now more money in sports broadcasting than just 10 years ago.  I don't know if the market will change anytime soon or what exactly the change will be when it happens.  It won't always keep going up though.

 

Someone said recently that this diminishing returns aspect will also help drive expansion because 1) consolidating markets and 2)removing the competition in the race to ensure a bigger share of the limited pie will be an influence.  I don't know if that's true or not, but it does make sense.

Dash1Bravo
Dash1Bravo

 @AllTideUp Just to pile on, with the number of advertising opportunities for the traditional "arse in chair" viewer diminishing, as AllTide pointed out, the effect is to make the advertising space where the arse is actually in the chair and willing to sit through the commercial, much more valuable. And, that means an expansion opportunity for networks that carry sporting events that folks watch. Interesting UF and UGA are listed as talking. They have a huge rivalry, and while Adams has long been a proponent of the network, Machen at UF has been heavily lobbying Loftin at A&M over the past year (and I think Machen was pimping Loftin ot move to the SEC while they attended academic meetings in 2010 together) on the Network as a major incentive for A&M to jump to the SEC. (That was kind of alluded to by Loftin back in Sep when he accepted the SEC invite. He made it a point to mention Machen's contribution to the A&M decision to jump).

Trackbacks

  1. [...] In ’08, the Big Ten Network was struggling. That conference was fighting to get cable clearance across the country (just as Texas’ Longhorn Network is currently fighting for cable placement). But soon after the SEC inked its deals with CBS and ESPN — which has provided a greater amount of national coverage for the league — the Big Ten got wise. Jim Delany’s league partnered with Fox and suddenly their channel — now packaged with other Fox properties — began to get more and more clearance on more and more cable outlets. And that’s meant more and more money for Big Ten schools. Or as Florida president Bernie Machen put it: “We (the SEC) sort of broke ground on major media contracts, and I think the others have followed along and actually moved the ball a little bit further.” [More] [...]

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