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SBJ Report: SEC And ESPN Nearing Deal On New Network; No Other Partners Expected

Ol’ Project X — the SEC Network — yeah, it’s happening.  (While others will claim that they were the first to realize that the SEC could start its own network, we actually pointed out that a network might still be a possibility in spite of the SEC’s deals with CBS and ESPN… and we did so way back in May of 2010.)  Now The Sports Business Journal is reporting that the SEC and ESPN are “nearing their final stages” of negotiations for an SEC channel.

First, some details from The SBJ:

 

1.  The expected launch date for the network is August, 2014.

2.  Obviously, the SEC will need to get all its schools’ Tier 3 broadcast rights for the first time in order to make the network a reality.  If the league is this far down the pike, then it shows that Mike Slive and company have already shown the league’s 14 presidents that each school can make more money with a network than by selling off their own Tier 3 rights individually.  Now, this would suggest that Florida’s monetary advantage over Vanderbilt, for example, would close a bit as both schools would presumably take home an even share of network revenue.  Missouri and Texas A&M, welcome to the all-for-one, one-for-all conference.  (Florida, of course, will still make more cash than Vandy on merchandise sales, attendance, etc… but in terms of TV dollars — unless there’s a surprise clause in there — all 14 schools will grab an equal slice of the pie.  That’s good news for all the league’s schools as they all want more cash.  That’s great news for the lower-level SEC schools who can’t sell their Tier 3 rights like Alabama and LSU can.)

3.  The SBJ reports: “ESPN is not likely to partner with another media company on the SEC channel.”  That would a disappointment for NBC/Comcast.  (Full disclosure: I do occasional work for CSS, but the tea leaves I’m about to read come from my brain alone and do not represent the views of anyone at that network.)  NBC/Comcast recently gave CSS a more SEC-centric feel to its programming.  The goal?  To prove to ESPN that NBC/Comcast would be a good partner to bed down with on a new SEC network.  Remember, the key to any new network is getting carriage on cable/satellite outlets.  That was the initial problem for the Big Ten Network.  The NFL Network still fights that battle to some extent.  And just Google the Longhorn Network for pages and pages of stories on its start-up troubles.  Partnering with NBC/Comcast — something MrSEC.com mentioned last week — would provide ESPN and the SEC with immediate access to all those Comcast viewers across the SEC footprint and beyond.  And Comcast is the top cable provider inside that footprint.  If, however, ESPN does not partner with NBC/Comcast or some other cable partner, it could mean that the SEC Network will be in for the same rough type of start those three aforementioned channels experienced.  Yes, SEC fan passion is through the roof.  But there are a heckuva lot of NFL and Texas fans, too.  This will be an interesting side story to keep an eye on.  It’s a bit like playing chicken.  ESPN and Texas have wound up in a ditch — to date — with their Longhorn Network.  Might cable operators try to drive ESPN and the SEC off the road in similar fashion?  Most certainly.  To what extent those cable/satellite providers are willing to go will depend on what the SEC and ESPN decide to charge as a carriage fee.  That’s the price that will get passed along to you, the viewer.

4.  Interestingly, “sources familiar with the negotiations say that ESPN Regional Television’s Charlotte office likely will become the headquarters for the new SEC channel because it already has the infrastructure and talent to get the channel up and running efficiently.”  Meaning: The SEC Network could actually emanate from outside the league’s own footprint.  (And, no, that should not have any impact on conference expansion or realignment.)

5.  ESPN would likely take over the league’s marketing rights from IMG.  In addition, the network would take over television ad sales for the league.  This type of deal would really marry the SEC and ESPN.  Ironically, while folks across the nation complain of ESPN’s bias toward the SEC, the fans at all 14 SEC schools — at least the ones I hear from — all believe passionately that ESPN hates the SEC and specifically their own favorite school.  No surprise.  SEC fans would tell you ESPN loves Ohio State.  I lived in Columbus, Ohio and can tell you that Buckeye fans believe ESPN despises them.  It’s all a matter of perception.  But since ESPN will eventually own and cover every conference and team in the country — that’s the real problem, folks — bias probably won’t be an issue when it comes to “liking” one team or league more than another.

 

So what’s all this mean for you?  In the summer of 2014, you’ll probably be asked to call your local cable/satellite provider and demand access to the SEC Network.  That provider will tell you that ESPN and the SEC are asking for too much money.  Things will go right down to the wire and you might actually miss a few SEC games because of the hardball the SEC, ESPN, Comcast, DirecTV, Dish and more will be playing with one another.  But someone will eventually blink.

When they do, your monthly television bill will go up $2-3 bucks a month.  In return, you’ll get to see more SEC action.  Now, those games will likely be the worst 14 football games on the SEC schedule in a given year.  The Tier 3 games, after all, are the ones you have to purchase via pay-per-view.  So think LSU-Idaho.

And let’s face it, most of you probably aren’t going to watch a whole lot of gymnastics, softball, soccer and the like.  Which means two things could drive up the SEC Network’s appeal.  First, the number of Tier 3 basketball games is nearly 100 contests per season.  SEC hoops fans will be able to see more games from all over the league with an SEC Network.

Second, just a couple of weeks ago, SEC scheduling guru Larry Templeton told The Birmingham News that he would be interested in seeing the SEC create a Thursday night package with ESPN.  Well, if the SEC and ESPN want to get mean with the cable/satellite providers, use you the fan as leverage and show — sorry for the expression — brass balls, a good Thursday night contest aired on the SEC Network would be a clear way of doing so.  How much heat would the providers take for not airing, say, South Carolina at Vanderbilt on a Thursday night?  (But again, that will come down to how much money ESPN and the SEC are willing to risk losing.  Put that game on ESPN and the revenue and exposure would be huge.  Put such a game on the SEC Network and the revenue and exposure would drop… but it might force more providers to pick up the network.  In turn that would raise revenue in the long-term.)

Bottom line: Project X is on the way.  The SEC Network will arrive in time for the 2014 football season.  It looks like the SEC and ESPN will be running the thing all by themselves.  Oh, and your television bill is about to go up.  (Even that has a plus-side, though.  Currently, let’s say pay-per-viewing your favorite school’s lone Tier 3 game costs you $50.  Well, if your cable/satellite provider up your rate by $4 per month, you’d still be adding tons of SEC programming — football games, basketball games and more — for less than you’d pay for one PPV football game in the current environment.)

 


29 comments
ChicagoJason
ChicagoJason

there is one place this article is wrong.  Just because you partner with comcast does not mean that it helps you.  Comcast partnered with the Pac-12 network and the network is still not available on Comcast in major markets like Chicago.  So just because the SEC network would be partnered with comcast does not mean it would be in all major markets at launch like the SEC would want.  

VUDores
VUDores

What will happen to those of us (I live in Lexington, KY) who do not have access to Comcast?  I have Insight cable (now owned by Time-Warner) and DirecTV, neither of which carry CSS.  If the SEC does create its own network, will it be mandatory for all of the SEC territory to have access to the network, some way or another?

AllTideUp
AllTideUp

This is something I've always wondered when it comes to partnering with companies like Comcast.  Comcast does cover a large footprint, both in SEC territory and outside of it.  It's certainly not the only TV provider out there though.  If the SEC and ESPN had partnered with Comcast, would that then make it more difficult to get an SEC Network on to other platforms?  If Comcast is making a profit off the distribution of a network, would that be enough of an incentive for the competitors of Comcast to say "no thanks?"

backdraft1212
backdraft1212

@DallasAg87 Some reports say over 25 million per year per school! Sucks to be you big 12!

kentatm
kentatm

does this mean the SEC is going to sever its relationship with CBS?

JRsec
JRsec

Given the long term economic outlook, the reality of having most of the conferences in the hands of ESPN should be a fearful proposition for all of the universities.  As a product, when monopolized, the value of college football can only go down.  The overexposure of the product on television has, when coupled with the economy, has given the product its first downward trend in gate revenue and concessions.  The demand for more interesting match-ups will lead ultimately to having only six home games and therefore less revenue for the local business community which has so faithfully sponsored so many things necessary for the minor sports in a university's life, not to mention less gate and concession revenue.  The result of that will only be more economic power in the hands of the one holding the monopoly, ESPN.

 

I believe that ultimately the revenue honey pot will shrink.  The TV moguls will tire of paying so much for a beholden product.  Conferences need to remember why they hired their Commissioners.  Most of them have been hired because of the legal, and contractual, knowledge and expertise and because of their ties to the networks.  By implication I'm saying that they may be paid by the universities of the conference they represent, but their profit making ties are with the sports broadcast industry not with the university system. This is not to say that these are dishonorable men, they are not.  It is to say that they have not really been thinking outside of their box in all of these contract negotiations.  They are so much a part of the broadcast world they cannot envision other alternatives to formal network connections.  That is why I expect to hear even further talk about the decline of the Big 10.

 

If Jim Delany has done anything novel in his tenure as Big 10 commissioner it was to form the Big 10 Network independently of the the major media outlets.  I expect regulations to be developed and implemented in the next 12 years that will eliminate the opportunity for the ACC, SEC, and PAC to do the same.  The lobby of the media networks were kicked into high gear when they realized the threat that the Big 10 Network posed to their world.  That's why the new wave of contracts are as high dollar as they are.  It buys the media the time they need to close that option.  Now that the contracts are about to conclude for this round the next step will be to punish the Big 10 and make their independence in this matter appear to be folly.  When non-profits are excluded from being able to acquire satellite relays the networks will shrink their income using the economy as a logical reason to do so.  With no option available to self produce this revenue stream will decrease for the schools thereby increasing their dependence on corporate grant money, and the networks.  The dependence on that grant money for research was already on the increase due to the stress on federal and state government governments.  It wouldn't be so bad to have more corporate funding except now most of our schools have to have attorneys study the details of the grants to make sure that by utilizing them they aren't forfeiting intellectual property.  Hence the reason why conference athletic commissioners need to be equally vested in the operation problems of the universities as they are in the world of media contracts.  In today's world the intricacy of one seemingly separate contract (sports broadcasting) actually impacts the primary purpose of higher education (through the grant revenue for research).  At stake is not only intellectual property, but inevitably intellectual freedom.   

DanHogan
DanHogan

Conference networks are great.  Really, we love BTN.  The quality of coverage from them is so much better than what we got from tier 3 before.  My only concern is that ESPN is taking over all of it.  I'd rather see NBC/NBC Sports start to compete with those guys a bit more.  

MoKelly1
MoKelly1

Looking forward to the new Network. We have Charter and I assume they will also carry the new Network. What I get confused on is whether ALL SEC schools will do better with the SEC Network or whether the Conference as a whole will do better. If Alabama/LSU/Florida are already successful in selling their rights but some lower level schools can't sell their rights, it seems to me it is possible Alabama/LSU/Florida could be getting a lower share in order to subsidize those lower level schools. If that is  apossibility and those higher level schools are still willing to participate, then I really tip my cap to the Conference.

Georgia Fan
Georgia Fan

Can someone explain something to me (I'm very unknowledgeable about TV rights).  According to this story:

 

http://espn.go.com/blog/ncfnation/post/_/id/61236/college-tv-rights-deals-undergo-makeovers-2

 

Many of the other conferences have large TV deals and more per school money per year than the SEC.  Why is this?  Is it because the SEC's television deals were signed earlier and therefore worth less, or seomthing else?  And does anyone expect the SEC to renegotiate a bigger tier 1 deal now that they've added major markets in Texas and Missouri?

JB TexasEx
JB TexasEx

"in terms of TV dollars — unless there’s a surprise clause in there — all 14 schools will grab an equal slice of the pie.  That’s good news for all the league’s schools as they all want more cash.  That’s great news for the lower-level SEC schools who can’t sell their Tier 3 rights like Alabama and LSU can"...

 

...or A&M's marketing/athletic department, who proved incapable of doing so due to incompetence or lack of business savvy.

John at MrSEC
John at MrSEC moderator

ChicagoJason...

 

Partnering with Comcast (or another cable provider) would most certainly help the SEC Network get initial carriage in the SEC footprint and that's the goal.  I've worked in television for 20 years, have won seven Emmys, and have friends at the top of one big-time cable provider.  I know what I'm talking about here.

 

The Pac-12 not being on in Chicago doesn't really factor into this.  Mike Slive and company would love to be on in Seattle, as an example, but so long as they're getting subscriber fees in the SEC's states, they'll be fine.  Then they'll grow from there.  (Also remember that the current SEC/ESPN syndicated package is carried practically nationwide already.  The SEC is a bigger draw than the Pac-12 right now.)

 

It just so happens that Comcast -- as written above -- is the top cable provider in the SEC footprint, so it would help more than others.  But the league isn't going in that direction so it doesn't matter.  This will be SEC/ESPN only and they'll have to cut individual deals with all the different cable and satellite providers.  Expect it to be an ugly process as it is for just about any network launching or working out a new contract.  

 

Thanks for reading,

John

DanHogan
DanHogan

John says in about the middle of the article..  Plan on being asked by the league to reach out to your provider and ask them for the channel.  The league will leverage you against them to get more money out of them.  Some will relent and some won't.  The league will give on some and won't on others.  I'd yell at both to come to an agreement.  

John at MrSEC
John at MrSEC moderator

 @AllTideUp 

 

Other providers would certainly use that in negotiations, but in the end, if the viewers demand the channel the provider will carry it.  CSS is the only one of NBC/Comcast's 10 regional channels not currently on DirecTV, for example.  The reason?  CSS doesn't have pro content -- Hawks, Hornets, Braves, Marlins games, etc.  The other NBC/Comcast channels do have NHL, NBA or MLB and fans demand that content.  Thus, the other providers carry the station.

 

But it does make the negotiations -- tricky anyway -- even tougher.

 

Thanks for reading,

John

John at MrSEC
John at MrSEC moderator

 @kentatm 

 

No.  CBS will still have the first pick from the SEC every week.  And ESPN will still air the majority of SEC games on ESPN, ESPN2 or ESPNU.  Now there will just be an additional SEC Network to carry some of the new inventory created by bringing two new teams into the league.

 

Thanks for reading,

John

John at MrSEC
John at MrSEC moderator

 @MoKelly1 

 

No school would take less cash.  They'll all make more.  It's just a matter of everyone making the same.  But that same share will be larger than the schools bring in now.  

 

Once the network gets picked up by a majority of cable/satellite providers, of course.

 

Thanks for reading,

John

John at MrSEC
John at MrSEC moderator

 @Georgia Fan 

 

The SEC set the bar with its eye-popping contracts with CBS and ESPN.  If you remember, it was some mind-blowing stuff in summer 2008.  But then other leagues' saw their contracts expired and they could use the SEC's model as a new benchmark.

 

Think of football.  Quarterback X signs a new deal with the Steelers this year.  It's the highest-paying in the game.  Then the next year, Quarterback Y's deal is reworked by the Cowboys and he becomes the top guy in the league.

 

Same principle.

 

The new SEC Network -- if done correctly and once it's picked up by a majority of carriers -- will put the SEC at or near the head of the pack.  My guess -- at the head as those households in Texas and Missouri will count for an awful lot.

 

Thanks for reading,

John

Vander
Vander

 @Georgia Fan As far as I know it is the fact that Pac-12, Big 12 and ACC have new deals in place that came well after the current SEC deal.  Also the Big 10 was the first conference to implement a conference network and it worked out better than most expected.

AndrewMartin
AndrewMartin

Everyone will know in a few years if your statement is correct JB.  One could argue that the best marketing decision was to switch conferences and differentiate even more from the Longhorns.  My guess, based on the recruiting bump the Aggies are seeing, is that the switch to the SEC will prove the best business savvy for Texas A&M.  The fact that Texas won't eat Thanksgiving dinner with Texas A&M even though they are family indicates that the Aggies' move hurts the Longhorns and help the Aggies.  Time will tell.

AgLove98
AgLove98

 @JB TexasEx Oh look.  Another creepy text message from our ex-girlfriend, UT-Austin.  Time to move on, darlin'.  Go buy some ice cream, rent a chick flick, and cry it out.

Shrunken head
Shrunken head

 @JB TexasEx

 Taking a break from calling your local cable provider about how much you LUUUV the Bongwhorn Network?

Vander
Vander

 @JB TexasEx We appreciate your expertise on this situation and ask that you continue sharing your knowledge of this matter with us.

 

Thank you!

OldAg94
OldAg94

@JB TexasEx

Thank you for sharing your feelings with the group.

We validate your right to feel just how you feel today.

However, it's probably about time to turn that little frown upside-down and move forward in the grieving process.

We're certain you'll find support appropriate to your needs in one of the many non-SEC boards out there - best of luck!

 

Gig 'Em,

- OldAg94

ChicagoJason
ChicagoJason

 @John at MrSEC 

John I am assuming the SEC feels they can pull this off just because they have a better name than the Pac-12?  Do you feel it will be as ugly as other negotiations?  With the name the SEC has I would feel more would want it.  Hard to compare an SEC net to LHN as that's one school vs programming for 14.  Easier to sell in my head, (less TV industry experience than yourself though)  The Pac-12 thing was messed up anyway as some people with Comcast in Pac-12 country didn't get the channel at launch.  Thanks for the reply.

John at MrSEC
John at MrSEC moderator

 @DanHogan VUDores...

 

Dan, you are  correct.  If the SEC and ESPN partnered with Comcast -- and they're not likely to so that point is moot -- the new SEC Network would still be available to other cable and satellite providers.

 

Being with Comcast or not really won't impact you, in Lexington, for example.  ESPN and the SEC will have to negotiate deals with all of the major cable and satellite companies and that will be an ugly process as it always is.  DirecTV recently pulled Comedy Central -- an old, established, popular network -- from its system for a day or two while the provider and the channel's owners (Viacom) hammered out  a new carriage agreement.

 

Expect a last-minute rush in late-August of 2014 to get the network onto your cable/satellite provider.  More than likely -- if the SEC Network launches like every other network has launched -- you'll miss a few games early on before someone blinks.

 

It's little like Congress... no one ever does anything until the last possible second.

 

Thanks for reading,

John

ATL14ESQ
ATL14ESQ

 @John at MrSEC  @AllTideUp John just to set the record straight CSN Philly and CSN Northwest are not available via DirecTV either. Never have been.

 

Comcast has the worst name in the business when it comes to agreements for their Sports networks.

 

Count me as one very glad that Comcast is out of the loop on this.

DanHogan
DanHogan

 @John at MrSEC  @kentatm I don't believe you mentioned this in this article, but wouldn't the SEC Network have considerably fewer games to broadcast than other conference networks?  My understanding of the Big Ten Network was that the conference reduced the size of the ESPN deal to leave more games for their network.  It also sounded like the Pac-12 left more of the high-quality matchups out of the broadcast contracts to build even more value into Pac-12 Net.  That has to play a role as well, right?

 

Because ESPN is the only partner creating the network, would they voluntarily move games off ESPNU and on to the new network?  I'm not sure what the distribution for ESPNU is like these days.  I'm on a cheap-skate plan from Dish and that is one of the stations that I don't get.  (Yeah, I don't get MSNBC, Bravo, AMC, or NBC Sports either.)

OldAg94
OldAg94

 @Shrunken head  I live in Austin and switched from Time Warner to AT&T awhile back. So suddenly ended up with LHN a few weeks ago. It seems that 168 hours/week is evidently a whole lot of time to fill talking about one program. 

My 6th-grader plays volleyball so I may actually find some incremental value in the addition to the lineup once a week...as far as football goes, I'm thinking an SEC channel covering 14 teams will be a lot less saturated. I flick by LHN a few times a week since it's right by ESPN, and I swear they have 3 different crews reading the same copy.

To each their own...

 

John at MrSEC
John at MrSEC moderator

 @david1314  @AllTideUp 

 

You are correct.  I was told by the folks at CSS that 9 of 10 Comcast/NBC networks were carried by DirecTV and that they were the only ones not.  In fact, it's indeed 9 of 12.  I trusted the horse's mouth... should have checked independently.

 

Thanks for reading,John 

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