The Pac-12 TV Contract: Now and Later

The unbelievably good news of the new Pac-12 media contract has been the major topic of conversation around Pac-12 country the last two days.  While there have been many great pieces on the subject (especially by our good friends over at CougCenter), what I've yet to see is a piece that discusses all implications of this deal in once place.  I will attempt to do that here.  Somewhat paradoxically, this discussion will be split over two days.  Here I will tell you everything you need to know about this deal now, in the first couple of years of the deal's existence.  However, one of the greatest things about this deal is that it is set up to be flexible, allowing us to capitalize on ever-changing media while conferences such as the SEC are hamstrung by the horrible long-term deals that they currently have in place.  Tomorrow, Matt Daddy will discuss this aspect by giving you an idea of what this deal will look like in ten years.  Let us start with the now:

The Money:

You've seen the numbers by now:  12 years, three billion dollars.  That averages out to $250 million a year, or 20.8 million per year per school.  However, its not like each school is getting that cash in year one.  Payment starts out at $180 million in year one, but will increase each subsequent year, with the final years being worth much more than $250 million.  Further, keep in mind that Utah doesn't start out with a full share, starting out at a 0% share next year (the last of the current TV deal), and gaining 25% per year until also getting a full share starting in 2014 (Colorado starts out at a full share).

This also doesn't mean that the pie is simply split 12 ways and everyone runs off with the cash.  The conference will take a share off the top for administrative expenses, and I'm guessing will also take a substantial amount of money for startup costs of the Pac-12 Network.  That said, the former expense is relatively small, and that latter, while potentially very large (Big Ten Network startup costs were in the $100 million range) are a relatively short term thing, and an investment that will pay dividends well into the future.

A final expense will be that schools have to buy out licensees for any rights contracts that may currently be in place.  For example, Oregon has a contract with IMG College for them to market events that aren't picked up as part of the national TV contract (basically, this is the Oregon content that you see on Comcast SportsNet Northwest and the Ozone).  Because part of this whole deal was to pool all conference rights together, these piecemeal contracts have to be bought out.  On the plus side, this means that there will be no more Oregon games on Comcast SportsNet Northwest.


However, when you consider that the current national TV contract is worth a paltry $60 million per year, schools will be in line for big raises even after these expenses are accounted for.  Once the Pac-12 Network is up and going and turning a profit, not only will these expenses cease, but even more revenues will be rolling in.

The Networks:

One of the many strokes of genius of the deal is that it doesn't wed us to any single family of networks.  The rights are basically split between three separate entities:  ESPN, which will show games on ABC, ESPN, ESPN2, and ESPNU; and Fox, which will show football games on the Fox broadcast network and FX, and basketball games on FSN.  The third entity is the Pac-12 Network, which will consist of both a TV and a digital component, and be wholly owned by the Pac-12.  Unlike, say, the SEC, which gave up all their rights in their TV deal (basically, they were paid NOT to create their own network,) the Pac-12 only gave up very specific rights, retaining rights to all events not to be broadcast on ESPN or Fox, and retaining all archival rights for airing on the Pac-12 Network.  Here is what that will look like for each sport.

Football:

First and foremost, every game will be televised nationally.  There will be no more 'regional' broadcasts.  No more worrying about living in Chicago and not being able to see the Oregon vs. Portland State game because its on Comcast.  No more worrying that the game supposed to be on FSN will be pre-empted for local hockey.  

 44 regular season games (22 each) will be split between the ESPN and Fox families.  Ten of these (eight on FOX, presumably two on ABC) will be on broadcast networks with full national clearance, at least four of those in primetime.   The rest will be split between ESPN, ESPN2, ESPNU, and FX, with ESPN ensured of getting four Thursday night games and four Friday night games per season.  The additional games (about three per week) will be broadcast on the Pac-12 Network.  Basically, the Pac-12 will get about as many games on ESPN/FOX as they do now (only all will be truly national).

However, its not as if the Pac-12 Network will just get the less desirable games that are usually banished to regional carriers.  Each week, the three entities will pick which games they want to broadcast for that week.  While this will largely alternate between Fox and ESPN, the Pac-12 Network will have first pick for two weeks of the season.  This ensures that there will be quality games on the Pac-12 Network, which is essential to helping in potential carriage fights with cable and satellite operators, as well as getting the most advertising money (yes, we got $250 million per season and didn't even have to give them all our best games).

The rights to the Pac-12 Championship Game will alternate between FOX and ESPN every year.  Fox will have the rights in even numbered-years, ESPN will have the rights in odd-numbered years.

Mens' Basketball:

While the football carriage is exciting, mens' basketball will be seeing even a more dramatic improvement.  68 regular season basketball games will be broadcast nationally.  46 of those games will be on the ESPN family of networks, many in the 8pm PT timeslot.  Despite the late timeslot, getting on ESPN alone is a big win for Pac-12 basketball, and should lead to better promotion of the product.  FOX will show 22 games a year on FSN.  The rest of the regular season games will be either on the Pac-12 Network, or the Pac-12 Digital Network.

Coverage of the Pac-12 Basketball Tournament will be rotated between ESPN and FOX, with ESPN holding the rights in even-numbered years, and FOX holding the rights in odd-numbered years.  This means that they have rights to the basketball tournament the year opposite they hold rights to the football championship game.  These rights include one quarterfinal game, one semifinal game, and the championship game.  The Pac-12 holds rights to the rest of the tournament for broadcast on the Pac-12 Network.  Larry Scott has said that the league will control where the tournament is held, and that they will reach out to other cities.

'Olympic' Sports: 

ESPN will show five womens' basketball games per season, including the tournament championship game.  Furthermore, ESPN will show ten other 'Olympic' sports events, expected to consist of baseball, softball, and volleyball.

The rest of the rights to these events will be held by the Pac-12 Network, with 200 live telecasts on the network itself, and "hundreds" more on the digital network.  Basically, every event taking place on a Pac-12 campus will be availiable for consumption somewhere, allowing the conference to build followings and eventually monetize what are traditionally referred to as the 'non-revenue' sports.  If you're worried about costs, don't.  Any of you who have ever watched a basketball game on Ozone know that simply a rotating center court camera and a feed of the radio broadcast makes quite a nice production at a bargain basement price.  My guess is that the Pac-12 digital network will consist of a lot of these kind of broadcasts.

What about the Pac-12 Network?

Obviously, the Pac-12 Network is a major part in this deal, and has the potential to add a lot of revenue to the existing streams.  Everything not given to FOX and ESPN will be on this network:  36 football games, around 150 basketball games, the hundreds of other sports.  I'm guessing there will be studio shows.  Archival footage.  Scott also said there would be academic programming on the network, allowing universities to showcase their academic programs. 

There are two routes the conference could go with this.  They could start a network from scratch, or they could buy an existing network and rebrand it.  The former would allow them to extract the price they want from cable and satellite companies, but could leave them in carriage fights and off the air in many markets.  The latter would get you on the air immediately, but you would be subject to the current contracts of whatever channel you buy out, unable to renegotiate until that contract is up.  The key is that the Pac-12 was able to keep rights to very good content, with top pick football games and tournament basketball games.  This will put a lot of pressure from fans on the cable and satellite companies to get a deal done.

The goal, of course, is that with a cable subscription and high-speed internet, you should be able to watch any athletic event taking place on a Pac-12 campus.  Larry Scott said in the press conference that he expects to have another announcement in about 60 days, and Wilner theorizies that this will be more details about the Pac-12 Network.

Conclusion:

Its pretty evident that FOX and ESPN were fleeced in this deal.  The Pac-12 got more money than anyone else, and did so giving up fewer rights.  They will own 100% of their network, and ESPN/FOX are basically paying the startup costs with this lavish deal.  I also think its underrated that there is an ESPN component to this deal--it certinaly wasn't expected, but think about all the promotion it brings.  College GameDay appearances have been invaluable to building the Oregon Football brand, and now the conference will have this treatment for basketball as well.  Furthermore, the deal allows the conference to be flexible and continue to profit off changing media, and that will be the subject of Matt Daddy's part two of this series.  In a decade, while other conferences are handcuffed by their current deals, the Pac-12 will be able to create a competitive and financial advantage that will have the other conferences trying to play catch-up.

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