Pac-12 Network is restructuring

[The Alabaster Yak]

https://online--news.com/2018/04/10...-fees-but-dont-hit-the-panic-button-just-yet/

So much winning going on with the Pac 12 Network. Although, I guess when the University Presidents flat out say they don't care about making money with the network, there's really nothing left to make fun of and we are just left with the reality that our beloved program is part of a massive failure of an athletic conference (in the sports that matter that is).

* In 2012, the Big Ten commanded $0.37 per sub, while the Pac-12 National network received $0.30.
* By 2017, the Big Ten’s average sub fee had jumped to $0.48, an increase of 30 percent, while the Pac-12 fee had dropped to $0.11.
That’s right: From $0.30 to $0.11 in the five-year span.

 

[Buffs35]

I didn't know the Pac 12 Conference had a network.

 

[Bison]

So much winning going on with the Pac 12 Network. Although, I guess when the University Presidents flat out say they don't care about making money with the network, there's really nothing left to make fun of and we are just left with the reality that our beloved program is part of a massive failure of an athletic conference (in the sports that matter that is).

I think the plug is going to be pulled on the P12N sooner than later and perhaps the P12 will ink a deal with ESPN+ for the third tier rights until it's time to renew the tier 1 and 2 deals.

 

[onealcd]

I think the plug is going to be pulled on the P12N sooner than later and perhaps the P12 will ink a deal with ESPN+ for the third tier rights until it's time to renew the tier 1 and 2 deals.

It is paying out $2.5 million to each school so I doubt the plug will be pulled since it is actually profitable and doing exactly what the presidents of the universities want it to.

 

[Bison]

It is paying out $2.5 million to each school so I doubt the plug will be pulled since it is actually profitable and doing exactly what the presidents of the universities want it to.

Isn't FOX flush with cash after selling a lot of their stuff to Disney which will end up on ESPN+ which is launching this Thursday? I'm thinking a sale of the P12N is now more likely.

 

[onealcd]

Isn't FOX flush with cash after selling a lot of their stuff to Disney which will end up on ESPN+ which is launching this Thursday? I'm thinking a sale of the P12N is now more likely.

I don't really see FOX offering $60 Million a year for the tier 3 rights of the Pac-12 since the ratings have been so poor, which is what they would have to just to break even on what the conference is distributing right now. Plus a lot of these issues are fixable but the school presidents refuse to fix them so why would they sell ownership in the tier 3 rights? I am certain the AD's would rather try and fix those issues first rather than sell immediately too.

 

[Bison]

I don't really see FOX offering $60 Million a year for the tier 3 rights of the Pac-12 since the ratings have been so poor, which is what they would have to just to break even on what the conference is distributing right now. Plus a lot of these issues are fixable but the school presidents refuse to fix them so why would they sell ownership in the tier 3 rights? I am certain the AD's would rather try and fix those issues first rather than sell immediately too.

Perhaps USC and UCLA will say they will handle their Tier 3 rights and that would be the end of the P12N while the Tier 1 and Tier 2 monies are split evenly like today. That's where I see things going down the road since USC & UCLA might feel like they are leaving too much money on the table.

 

[ahoelsken]

I don't really see FOX offering $60 Million a year for the tier 3 rights of the Pac-12 since the ratings have been so poor, which is what they would have to just to break even on what the conference is distributing right now. Plus a lot of these issues are fixable but the school presidents refuse to fix them so why would they sell ownership in the tier 3 rights? I am certain the AD's would rather try and fix those issues first rather than sell immediately too.

Its more likely that the network breaks up than somebody buys into it right now.

 

[MiamiBuffs]

https://online--news.com/2018/04/10...-fees-but-dont-hit-the-panic-button-just-yet/

He nearly put me to sleep with that. Kagan is averaging in their analysis. Based on some guesses.

Kagan isn’t reporting the terms of the Pac-12 Networks’ carriage contracts. It’s reporting the average fee for subscribers across the country.

 

[J.R. Ewing]

This isn’t going to help more Pac-12 coverage.

 

[AeroBuff99]

This isn’t going to help more Pac-12 coverage.

All about the money. Comcast has done the math and determined that the viewership doesn't justify the carriage fee. Cord cutting putting downward pressure on carriage fees.

 

[MiamiBuffs]

This isn’t going to help more Pac-12 coverage.

Let the fracturing begin...

 

[Buffnik]

This isn’t going to help more Pac-12 coverage.

That almost guarantees that there's going to be a huge push to get the Pac-12 into more important local markets for its next deal. In the west, Nevada is the only target of any value left. It all comes back to the state of Texas, with Oklahoma having value above Nevada (about a million more people but not growing as fast).

 

[BlackNGold]

Comcast stated in their quarterly conference call earlier this year - they were planning on focusing on Internet Access more than their Cable TV. They made a lot of other lineup changes. This will continue to evolve.

 

[Bison]

One huge positive about all of this with the third tier rights market bubble bursting is that the Pac-12 schools would not be as negatively affected as the B1G and SEC schools if revenue was to collapse.

That almost guarantees that there's going to be a huge push to get the Pac-12 into more important local markets for its next deal. In the west, Nevada is the only target of any value left. It all comes back to the state of Texas, with Oklahoma having value above Nevada (about a million more people but not growing as fast).

I'm getting the feeling that the PAC is not gonna expand after all. That realignment of the early 2020s might be more of a cherry bomb than a large firework.

It's very possible Nebraska could head back to the Big 12 if the money and conference makeup is right.

 

[Bison]

This isn’t going to help more Pac-12 coverage.

Or the ACC Network that is supposed to launch next year.

 

[onealcd]

One huge positive about all of this with the third tier rights market bubble bursting is that the Pac-12 schools would not be as negatively affected as the B1G and SEC schools if revenue was to collapse.



I'm getting the feeling that the PAC is not gonna expand after all. That realignment of the early 2020s might be more of a cherry bomb than a large firework.

It's very possible Nebraska could head back to the Big 12 if the money and conference makeup is right.

I’m not sure about that man, the big 10 will probably just up their in market rate to make up the difference and those people will gladly pay it. I’m just more bummed as a college football fan with Comcast because the big 10 network puts out a lot of quality content and has some good games on there since there are so many teams.

I said it on the 247 board but I think the three conference networks should take more of a team approach to negotiating with these providers. The three are more valuable as a group, especially in those cities that aren’t in market. Basically negotiate to where the in market conference is on your basic cable offering but the other two are on the additional sports tier and if you try to take one off you lose all three.

 

[Buffs35]

One huge positive about all of this with the third tier rights market bubble bursting is that the Pac-12 schools would not be as negatively affected as the B1G and SEC schools if revenue was to collapse.

I always laugh at this logic. "We are already used to receiving nothing for our Tier 3 rights, so it won't hurt as bad when the whole system goes to sh*t."

Just polishing a turd.

 

[Buffnik]

I always laugh at this logic. "We are already used to receiving nothing for our Tier 3 rights, so it won't hurt as bad when the whole system goes to sh*t."

Just polishing a turd.

It actually makes sense in terms of relative competitiveness. Pac-12 isn't trying to make money on Tier 3 (Pac-12 Networks). Pac-12 is just trying to promote the universities and some social initiative while breaking even there. We're the PBS of major college sports. So other conferences losing profit centers there actually closes the gap quite a bit. Pac-12 still needs to figure out how to better monetize while being more efficient on costs. But this new carriage reality does hurt others much more than it does the Pac-12.

 

[Bison]

It actually makes sense in terms of relative competitiveness. Pac-12 isn't trying to make money on Tier 3 (Pac-12 Networks). Pac-12 is just trying to promote the universities and some social initiative while breaking even there. We're the PBS of major college sports. So other conferences losing profit centers there actually closes the gap quite a bit. Pac-12 still needs to figure out how to better monetize while being more efficient on costs. But this new carriage reality does hurt others much more than it does the Pac-12.

That's what I'm getting at too. ESPN+ could somewhat set the market for such media rights deals. That's why the MWC's upcoming media rights deal could be a trendsetter since they were the first to market with a conference network.

 

[Sportsfan101]

It's all about Texas for the Pac-12 Network going forward. That is why we're going to grab some combo of TCU/Houston/Tech in the next round of expansion.

 

[MiamiBuffs]

Comcast stated in their quarterly conference call earlier this year - they were planning on focusing on Internet Access more than their Cable TV. They made a lot of other lineup changes. This will continue to evolve.

Really. Thats a sign of the death knell of pay TV if you ask me.

 

[GoBeers]

He nearly put me to sleep with that. Kagan is averaging in their analysis. Based on some guesses.

Kagan isn’t reporting the terms of the Pac-12 Networks’ carriage contracts. It’s reporting the average fee for subscribers across the country.

Wilner often does a good job collecting facts, but often a poor job in interpreting them. He also seems rather bad at math, so he never really analyses the numbers he uses properly.

Would guess the key distinction is that the p12 net has great lowered out of market rates to get more distribution. Average price goes down as the out of market subs go up. Obviously that’s not rocket science.

I don’t think that SNL Kagan is remotely correct either. Wilner has published previously numbers (from IRS statements) on P12N operating that costs put expenses around $80 million. Add in the $2-2.5 million payout per school and revenue has to be around $100 million. At $0.11 per sub per month, that’s $1.34 per year, which means you’d need 75 million subs go make $100 million in yearly revenue. That’s not remotely true, the P12N probably has 1/3 of that. So the numbers clearly don’t add up. The $0.11 cents really sounds like the out of market rate to me. If the P12N has 9 million in market subs at $0.80 per month, and 10 million OOM subs at $0.11 per month, that would add to the $100 million per year.

The question that matters is how strong is in market coverage and can those rates be renegotiated before the end of the TV deal in 2023. Lose enough in market subs, and that $2.5 milllion per school profit could quickly go south given the high cost of the network producing so many (unwatched) events.

 

[MiamiBuffs]

I don’t think that SNL Kagan is remotely correct either. Wilner has published previously numbers (from IRS statements) on P12N operating that costs put expenses around $80 million. Add in the $2-2.5 million payout per school and revenue has to be around $100 million. At $0.11 per sub per month, that’s $1.34 per year, which means you’d need 75 million subs go make $100 million in yearly revenue. That’s not remotely true, the P12N probably has 1/3 of that. So the numbers clearly don’t add up. The $0.11 cents really sounds like the out of market rate to me. If the P12N has 9 million in market subs at $0.80 per month, and 10 million OOM subs at $0.11 per month, that would add to the $100 million per year.

That makes a lot more sense to me as well.

The question that matters is how strong is in market coverage and can those rates be renegotiated before the end of the TV deal in 2023. Lose enough in market subs, and that $2.5 milllion per school profit could quickly go south given the high cost of the network producing so many (unwatched) events.

2022 is a long ways away.

 

[Buffnik]

Is Nevada considered a Pac-12 home market even though we don't have a team there?

If not, I think it would make some sense to look hard at UNLV. Especially if that ties in with making a play for Texas Tech, which has a long history with CU and the Arizona schools.

 

[onealcd]

So something I am confused about in terms of the contracts the Pac-12 signed with Comast and Dish, why would those providers care if the Pac-12 wanted to condense their offering from 5 channels to 1? Wouldn't that lower costs for both of them, get higher ratings and make their cable packages more simple? If the ratings are true for these non-revenue sports then why is this such a pain in the ass to change?

Also, yes the contracts were for a ton of live events but those aren't bringing in viewers and/or money. It just seems like it would benefit both parties but who knows.

 

[Bison]

Those regional channels were to attract people who are still using cable instead of the internet. Those regional channels will probably go away in the next media rights deal.

 

[onealcd]

Those regional channels were to attract people who are still using cable instead of the internet. Those regional channels will probably go away in the next media rights deal.

The regional channels are only to support to many live events since they needed more air time than one channel could provide, what I am asking if why would comcast be against condensing those down to one channel? Obviously a football and basketball focused channel is going to bring a lot more viewers and subscriptions than what we have right now.

 

[Bison]

The regional channels are only to support to many live events since they needed more air time than one channel could provide, what I am asking if why would comcast be against condensing those down to one channel? Obviously a football and basketball focused channel is going to bring a lot more viewers and subscriptions than what we have right now.

Agree with that and with streaming TV, it looks like that will be the way the P12N goes.

 

[MiamiBuffs]

Those regional channels were to attract people who are still using cable instead of the internet. Those regional channels will probably go away in the next media rights deal.

Those regional channels were designed to be a "pair" where wherever you live you get 1 regional and the national. Theoretically you'd get a lot of content related to the 2 schools in your regional all the time. With the rise of streaming replacing traditional cable there is not a physical cap anymore in terms of the supply pipe. So, each school in a streaming environment could actually have their own channel.