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Jun
15
2012

An interview with a television media industry expert: The ACC, TV Contracts and the future.

Today we have with us at

AllSportsDiscussion.com ESPNJacket.

Any reader of the Georgia Tech message board The Hive, knows ESPNJacket as the site’s resident TV and Media expert. He’s spent the better part of the last several weeks providing clarification and insight into the complexities and nuances of conference television contracts with mostly Georgia Tech fans, but has answered questions and debated points from all comers.

He has worked with ESPN covering college football for more than 10 years and has also worked for Fox Sports’s NFL coverage.

Let’s ask him a few questions with regard to the ACC, television\media and the future. We appreciate ESPNJacket taking the time to answer some questions for us here.

1. In the ACC’s television deal, they sold all of Television third tier rights to ESPN. Hopefully we understand by now this not include school revenue generating media rights like radio, coaches shows, etc. I’ve seen estimates as low as $100K and as high as several millions for 1-2 low end football games and a handful of basketballs games. For most schools what can they realistically expect? Are there additional costs we are unaware of? 

The important part to understand first is that the contents of the tiers varies from contract to contract. Tier 1 means first choice. What is included in that first choice is specific to each deal. The same is true of Tier 2. Traditionally, Tier 1 meant the over-the-air broadcast networks. Tier 2 traditionally meant cable. All of that has changed now, specifically in the very different Pac 12 contract, that has an innovative method of the 3 networks (ESPN, Fox, Pac 12 Network) drafting games, with the drafting methodology currently being a secret.

Back to your question, Tier 3 is whatever is left over. This includes radio broadcast rights, signage, coach’s shows, other stuff, and the few television games for the revenue sports that are left. Typically, and specifically in the Big 12, this is one home football game and up to six home basketball games. Probably the best proxy for what they are worth is to look back at the last SEC contract. The SEC schools would keep the rights to the games not chosen in their previous contract, so one or two Tier 3 games, and make them available on pay-per-view. They hoped to break even on those. So, the games aren’t really worth anything. Producing live sports on television is harder than it looks.

2. The ACC’s deal averages 17 Million a year over the course of the contract. Is this a fair monetary value for the ACC? Is this a competitive deal? 

If you look at these deals from a larger perspective, it is a very good one. The ACC outsources the whole television aspect of media while the schools maintain the Tier 3 rights that are actually valuable, particularly radio.

I think the two things that totally screw up the perspective of many fans about these deals are the Longhorn Network and the Big Ten Network. The LHN is an entrepreneurial venture that may or may not succeed. The inability to show high school games, after the NCAA ruled against doing so, really hampers the content they can get. There are stories out there now about Texas trying to secure 3 games this year. They are going to have to pay Tier 2 Fox to not take a couple of games to make that happen. Whether that money comes from the collective Big 12 or from LHN, it is going to come from somewhere.

The Big Ten Network has both Tier 2 and Tier 3 content. There are weeks during the season where the BTN chooses second (after ABC, before ESPN). There are many in the business who believe those Tier 2 football games are the biggest reason the BTN was able to obtain wide carriage. The BTN is not a proxy for Tier 3 rights value. The Pac 12 took the BTN concept up a notch. That’s why they have a “draft” for games, as described earlier.

3. At year 5 and year 10 the ACC get’s looking into their contract for a possible increase. What kind of  increase could the ACC expect and what factors will play a role? 

The details haven’t been released on this, but essentially both sides agreed to metrics that will determine the value going forward. You can surmise that they relate to success on the field and court, and in the television ratings.

4. We often hear that one of major points of the ACC’s deal is exposure through the ESPN family of networks. What are the benefits of the ACC being so closely tied to ESPN? 

The benefit is exposure, though. It is really great for fans to be able to see all of their games on the family of networks. When ESPNU was new, that probably was annoying for some. But it is in over 70 million homes now, which is close to the number of homes for all of the Fox sports networks combined. The result of all of that is a combination of fans being more engaged by watching the games live and recruits seeing the games as well. Ask some Pac 12 people about the downside of poor coverage and how it damaged their basketball programs.

5. John Swofford has mentioned the possibility of subscription based ACC network. I assume this is through ESPN. Is this a possibility? Could this be a revenue generator in the future? 

I’ll skip this one. I don’t know much about that.

6. The ACC has created their own network of sorts on a digital platform they created last fall fit with news reports, game analysis, and features. I understand this can be another source of revenue for the ACC. What is your opinion of the ACC’s Digital Network  (theACC.com and theACCdn.com)?  

Online content is certainly the future. ESPN has put a lot of money into espn3.com. I am an event guy rather than a content delivery guy, so I can’t really elaborate intelligently about it. They are looking to the future and are doing a good job of being at the forefront.

7. What model do you see for the television pay distribution of the likely 4 team future playoff? 

I would guess something like 70% will be guaranteed money, spread across the conferences, with the majority of that going to the Big 5. Don’t be surprised if the way it is explained is not particularly clear and that it is misreported for years, like the BCS money was. How many times did a national reporter, who should know better, claim that School X was playing for a $20 million payout at the end of the season, when the second BCS team got about $5 million to be split among its conference members?

8. What is the biggest mis-conception across the board with conference television contracts? 

That they are simply about squeezing every nickel out of a television network. There are important clauses in these contracts that determine how many times a conference can get a particular slot and how many times they must get a particular slot. This drives exposure. A conference can trade more control of its content and less guaranteed quality spots for more money. It is a gamble, though, as giving up that control without guaranteed exposure can lead to good games dropping to little-watched stations.

9. Any final thoughts? 

Thanks for having me. The playoff posturing the next week or two will be fun to watch.

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