Texas and ESPN $300 Million Network

[Idot Buff]

They deal is only guaranteed to carry 1 UT football game.

Great point...so where is the value for ESPN? If I were an investor in Disney, I would be infuriated with this deal. It is a complete loser, if you ask me.....of course, this is based on zero information (P&L, forecasted growth, etc).

 

[buff4bcs1985]

Great point...so where is the value for ESPN? If I were an investor in Disney, I would be infuriated with this deal. It is a complete loser, if you ask me.....of course, this is based on zero information (P&L, forecasted growth, etc).

the only thing i can figure is texas and ESPN are assuming this will nuke the tejas 10 and espn will pick up the rest of the games after the league dissolves...because quite frankly, this deal boggles the mind...

 

[Buffnik]

All I can think is that ESPN knows that it can force this channel on every cable company in Texas as something they offer in a basic tier (maybe Oklahoma and Arkansas, too).

 

[The Guest]

Great point...so where is the value for ESPN? If I were an investor in Disney, I would be infuriated with this deal. It is a complete loser, if you ask me.....of course, this is based on zero information (P&L, forecasted growth, etc).

Obviously the people who made the decision have a great deal more information than we do, though that doesn't mean it was the correct decision.

Maybe, there's writing in the contract that prevents Texas from joining a Fox broadcasted conference? Maybe this is a strategy that prevents the 12-Pac from making another grab at Texas, thereby denying ESPN rights to Texas, and presumably aTm as well. They may be protecting future market shares.

 

[Idot Buff]

Obviously the people who made the decision have a great deal more information than we do, though that doesn't mean it was the correct decision.

Maybe, there's writing in the contract that prevents Texas from joining a Fox broadcasted conference? Maybe this is a strategy that prevents the 12-Pac from making another grab at Texas, thereby denying ESPN rights to Texas, and presumably aTm as well. They may be protecting future market shares.

Clearly, there is more to the story. The ESPN boys and girls are no dummies....but, that is not to say that they may have rolled the dice on this one.

 

[CarolinaBuff]

Damn. I wonder which game they'll get. It does reduce the conference's tv value, though.

But by how much? It doesn't sound like it will reduce it that much since the contract is based more on UT sports as a whole, so I'm very surprised that ESPN paid this much. They'll get 8 basketball games per year and will replay some football games, but that's still a crapload of money for not much live basketball and football coverage. The 1 football game they'll get will be against some non-conference cupcake.

 

[Del]

If they market the Longhorn network for 3.99 a month then they would need around 3.75 million people to sign up to get their 15 million back per year as far as the subscribers go (I think BevoDemand is around that much now via TimeWarner) - there are around 26 million people in Texas as of 2011, not sure how many subscribers they would get outside the Lonestar state ---not sure how it would work as far as the advertising revenue etc, seems like it would be a lot of local advertising.

 

[Idot Buff]

If they market the Longhorn network for 3.99 a month then they would need around 3.75 million people to sign up to get their 15 million back per year as far as the subscribers go (I think BevoDemand is around that much now via TimeWarner) - there are around 26 million people in Texas as of 2011, not sure how many subscribers they would get outside the Lonestar state ---not sure how it would work as far as the advertising revenue etc, seems like it would be a lot of local advertising.

Not sure that it would be an individual consumer decision for only the UT network...much like the Big 10 Network. It will be part of a package deal for several channels where you pay an incremental $10, and Texass will get their piece of the pie.

 

[ScottyBuff]

The Big 12 deal is not devalued in any way with this deal. ABC/ESPN still get first pick of 19 conference football games per year and they own ALL the conference basketball games. Next comes FSN which can also sub-license 7 games to ESPN and 5 to Versus and also owns conference women's BB.

The 1 live game per year on the Longhorn Network will be an OOC game (probably a creampuff) that wouldn't have been televised anyway. ESPN owns the rights to the season's conference games already, and they will now sub-license replays to the Longhorn Network to fill their content.

Longhorn fans will now be able to re-watch the past season and the "great games" of all time on constant rerun, and I'm sure they will.

ESPN is paying the school to have the rights to distribute and market the channel, but they will do this because they already own the content. Now, ESPN can collect 100% of the carriage fees ($0.75 to $1.00) per subscriber for the Longhorn Channel wherever it can gain distribution (which should be pretty significant). ESPN collects a "paycheck" from sublicensing the content to the channel, while charging advertisers based on the ratings the channel gets. If this deal is anything like other "channel launches" the "payout" isn't a flat-fee, but based on gaining distribution and becoming profitable first. Most likely there is a rights fee plus a profit-sharing component that UT gets. It could be $5MM in year one but grow to $18MM in year six.

The ratings for live events will be really good for a cable channel. Throw in broadcasting of sports like baseball, golf, women's VB, coaches shows, and other content like some high school football and rodeo, and they should do really well in that region of the country. I bet this brings more sports to UT, like wrestling in order to fill content and sell themselves as a "complete" athletic department.

The rest of the Big 12 lose/gain nothing in this deal, just the insecurity of being average Joe's living on the same block as Bill Gates.

Word has been around awhile that OU is planning a Sooner Network similar to this. They could certainly pull off a decent deal (nothing like UT's but not bad I bet).

This event certainly does nothing to "circle the wagons" among the Big 12 membership, but I don't think this does anything more to kill the conference than has already been done.

Unless the SEC throws a gob of money at OU and Texas A&M to join, which is not realistic considering that they have a flat-fee "traditional rights" deal with CBS and ESPN and it is debatable that they could gain anymore mid-stream by adding members; where would any of those teams find homes?

The Big East is nowhere near even Big 12 TV money, but would only increase travel costs for schools like Kansas and Missouri.

I think UT will fight to keep the Big 12 together, because they get to act like an independent already but have the security of a conference home at the same time. It's like having a good wife at home that doesn't care that you go out on the weekend banging all the hot tail you can find. Who would leave that?

 

[CaliBuff901]

I'm looking forward to watching the 2001 BIG XII CCG on re-run!

 

[SBG]

Texags.com blowing up. Good stuff.

I don't like how they are going to show HS games on the tv though. Talk about a recruiting advantage (not that they already don't have one).

 

[Buffarino]

about 1/3 UT fans in Texas were ATM fans in the 90's when they were winning the SWC.

I'm gonna call shenanigans on that one. UT and aTm despise each other. There is little crossover from their fanbases.

 

[Corn_Fan]

No different than ND/NBC's arrangement. Here's the kicker, though - ND made less last year from it's TV contract than Northwestern did from the Big 10 contract. As we continue down this conference realignment path, I think UT is making a huge tactical error. They're going to pull in gazillions of dollars in the short term at the expense of their conference. Then they'll kick the conference to the curb and go indy. That's when it gets really interesting.

There are a couple of major differences though. I can choose to not watch NBC and therefore NBC makes nothing off me. But if I subsribe to cable or one of the dishes, part of my subscription dollars goes to ESPN and now, Texas. This is one of the reasons ESTN (Entirely Sports of Texas Network) will be able to have such crappy programming and still make money: ESPN will force this crap network on cable and dish providers. ESPN is the biggest bully on the cable block. ESPN is to cable what Texas is to the Big XII. ESPN and Texas are a match made in fiduciary heaven.

The other MAJOR difference between NBC buying a college team Vs. ESPN buying one is nobody gives a rat's behind about what NBC has to say about college football in general. NBC does not have any shows dedicated to college football on a national level, unlike ESPN. ESPN will be hyping Texas like nobody's business. It will be enough to make a grown man throw up in his mouth a little. Who do you think ESPN will be promoting for the BCS championship game if it comes down to choosing between Boise State or Texas. or Colorado or Texas. In case you have forgotten ESPN's power, ESPN created Tebow. This is scary stuff.

 

[Mick Ronson]

I'm gonna call shenanigans on that one. UT and aTm despise each other. There is little crossover from their fanbases.

yes, they do hate each other. However, people in Texas unaffiliated with either university compose the majority of the would-be viewership in the Great State of Texas...these people vacillate between whomever is the winningest of the two. interstate fans, so-called "t-shirt" fans. since 05, that has been Texas. in the 90's it was ATM. people who are probably Cowboys or Texan fans foremost who WILL tune in on Saturday to see a top 5 UT team. one that lost the previous week at DKR to Iowa State, prolly not.

 

[Corn_Fan]

They deal is only guaranteed to carry 1 UT football game.

I highly doubt that ESPN and Texas (behind closed doors) have one game per year in their plans for the long haul. ESPN did not pay 300 Mil for that.

ESPN knows that if they own Texas, they own the Big XII. Thereforto ESPN bought Texas.

Now ESPN has total control of the Big XII/Beebster when it comes to television contract negotions between the Big XII and tv networks like fox.

Don't be surprised if in the not to forseeable future EVERY Texas game is shown on either ABC/ESPN or the Bevo Network.

One thing that will happen is the big XII orphans will complain when Big XII conference football games involving Texas begin to be shown on the Bevo Network. Once ESPN gets Beebey to drop Fox, there won't be a network to show the crappy Big XII contests. Texas will offer their network out for a small fee. Big XII orphans will bitch. Texas will threaten to leave. Big XII orphans will cave.

 

[Corn_Fan]

The Big 12 deal is not devalued in any way with this deal.QUOTE]

I can come up with at least one scenario that would devalue the Big XII tv deal.

Right now the Big XII has a deal with ESPN and a deal with Fox. The Big XII is set to negotiate with Fox I believe this spring (interesting timing for ESPN to buy Texas, eh?) Let's say Beebe, Dodds and the boys sit down with Fox. Fox says they will pay the Big XII 500 Mil over 10 years or whatever. Beebs is all giddy and ready to jump at it.

Dodds says, "wait now Beebs, ESPN told me they would give us 500 Mil over 10 years as well. Only catch is instead of splitting the 500 Mil equally between the 10 Big XII teams Texas will be taking half of it and the other half will be split between the other 9 teams." beebs says "no way that is unfair and the other Big XII schools will not accept that." Dodds says, "Well then Texas will go independent."

Beebe asks fox what they would pay the Big XII if Texas left the conference. Fox tells him 100 Mil.

Anyway that is how one scenario could play out in which the unwanted orphans could get a crappier TV deal.

 

[Buffarino]

yes, they do hate each other. However, people in Texas unaffiliated with either university compose the majority of the would-be viewership in the Great State of Texas...these people vacillate between whomever is the winningest of the two. interstate fans, so-called "t-shirt" fans. since 05, that has been Texas. in the 90's it was ATM. people who are probably Cowboys or Texan fans foremost who WILL tune in on Saturday to see a top 5 UT team. one that lost the previous week at DKR to Iowa State, prolly not.

I lived in Texas for 5 years. I still say shenanigans. People who have no affiliation with any team don't generally follow sports and don't care who wins or loses. If they follow sports, they already have a team.

That is my experience from living down there in the 90s. It is a far different sports culture than CO.

 

[Mick Ronson]

I lived in Texas for 5 years. I still say shenanigans. People who have no affiliation with any team don't generally follow sports and don't care who wins or loses. If they follow sports, they already have a team.

That is my experience from living down there in the 90s. It is a far different sports culture than CO.

i guess what i see is different. i have some cousins from Texas who went to SMU, Oklahoma, or Vanderbilt, sister lives in Dallas, and my step-dad's extended family live in Texas (mix of OU, U Tulsa, and OSU people). every year at Christmas, they are wearing different "gear"....sometimes it's UT, sometimes ATM. especially the SMU people. maybe my family are all just flakes...dunno. hehe.

i would agree it's a far different sports culture than CO.

 

[Deleted member 807]

How long before Bevo U-tv gives free and discounted commercial airtime to the companies and churches of parents that they will be recruiting?

ESPN put a lot of money on the performance of 18-22 year old dope smoking kids.

The network will go through the MTV cycle. At first, it will just be longhorn sports and reruns. But eventually it will morph into Pimp My Pickup, Real World 40 acres, and feel good documentaries of former players who lost everything, kicked their drug habits and attend alcohol free reunion tailgate events together.

Schools like Rice, UT-San Antonio, and UTEP will make 70% of their athletci departmet annual budget from the UT's home and done payola.

At some point, Iowa State agrees to play all games against UT inside the state of Texas.

 

[Del]

i guess what i see is different. i have some cousins from Texas who went to SMU, Oklahoma, or Vanderbilt, sister lives in Dallas, and my step-dad's extended family live in Texas (mix of OU, U Tulsa, and OSU people). every year at Christmas, they are wearing different "gear"....sometimes it's UT, sometimes ATM. especially the SMU people. maybe my family are all just flakes...dunno. hehe.

i would agree it's a far different sports culture than CO.

I grew up in Austin during the down years of UT - 86-98 and have now come back since 07-Present -- As far as the fans go-- the young kids will flip flop based on the success unless their parents are alums of either said school but anybody over the age of about 20 has made their choice minus some transient transplants from the west coast.

 

[Buffarino]

anybody over the age of about 20 has made their choice minus some transient transplants from the west coast.

That is a big driver of the different sports culture than CO, IMO. CO has so many transplants that is makes a far different sports scene than somewhere like TX where the majority of the population was born there and has lived most or all of their lives there.

 

[SuperiorBuff]

I ran into several ATM fans at the 01 conference championship game who were openly cheering for Uterus saying "ATM first, then the state of Texas."

 

[Del]

That is a big driver of the different sports culture than CO, IMO. CO has so many transplants that is makes a far different sports scene than somewhere like TX where the majority of the population was born there and has lived most or all of their lives there.

Exactly!!

 

[ScottyBuff]

The Big 12 deal is not devalued in any way with this deal.QUOTE]

I can come up with at least one scenario that would devalue the Big XII tv deal.

Right now the Big XII has a deal with ESPN and a deal with Fox. The Big XII is set to negotiate with Fox I believe this spring (interesting timing for ESPN to buy Texas, eh?) Let's say Beebe, Dodds and the boys sit down with Fox. Fox says they will pay the Big XII 500 Mil over 10 years or whatever. Beebs is all giddy and ready to jump at it.

Dodds says, "wait now Beebs, ESPN told me they would give us 500 Mil over 10 years as well. Only catch is instead of splitting the 500 Mil equally between the 10 Big XII teams Texas will be taking half of it and the other half will be split between the other 9 teams." beebs says "no way that is unfair and the other Big XII schools will not accept that." Dodds says, "Well then Texas will go independent."

Beebe asks fox what they would pay the Big XII if Texas left the conference. Fox tells him 100 Mil.

Anyway that is how one scenario could play out in which the unwanted orphans could get a crappier TV deal.

The upcoming negotiations with Fox (really FSN) is a secondary rights deal and will not be anywhere near $500 million for 10 years. The current deal was 4 years at $78 million with 12 teams in the conference.

The TV deal is not negotiated for different revenue sharing, that is done at the conference level before negotiations even begin. ESPN can't buy the CONFERENCE's TV rights and say they will pay more for TEXAS only. The Big 12 has already agreed on how revenues get distributed, and it is based on TV appearances. Yes this favors the bigger schools, as we all know well and good; but it isn't the 80/20 split you are making it out to be.

Yes Texas brings value to the Big 12, but the FSN deal is not going to be the negotiation that threatens to break the league up. What will happen is that the Big 12 will want the secondary rights deal to "align" with the primary deal in length. This means that it will be another 4-year deal to line up with the ABC/ESPN deal that runs through 2016.

In the meantime, expect SoonerVision to become a reality and I would bet Aggie will try to hop on that train as well (with much less success).

But the implosion of the Big 12 will still wait until the 2015-2016 time frame, if it happens.

 

[Del]

I don't think the Big XII is going anywhere now because its not in TexAss' best interest anymore. Now Texas gets all the benefits of the scheduling stability with a BCS conference - especially for their other non revenue sports as well as the benefits of being an independent with their own TV network. The other BCS league TV contracts are all sewn up once the Pac 12 gets their new deal. The Big Ten, ACC, and SEC all have championship games now so adding another team will only decrease the revenue each school gets. The Big East is the only other option and hell they already have 16 teams for Basketball so I'm really not sure how many more teams they could really add.

I think the other schools in the Big XII are just royally ****ed. Aggy should have gone to the SEC this summer because they missed their chance.

 

[ScottyBuff]

I don't think the Big XII is going anywhere now because its not in TexAss' best interest anymore. Now Texas gets all the benefits of the scheduling stability with a BCS conference - especially for their other non revenue sports as well as the benefits of being an independent with their own TV network. The other BCS league TV contracts are all sewn up once the Pac 12 gets their new deal. The Big Ten, ACC, and SEC all have championship games now so adding another team will only decrease the revenue each school gets. The Big East is the only other option and hell they already have 16 teams for Basketball so I'm really not sure how many more teams they could really add.

I think the other schools in the Big XII are just royally ****ed. Aggy should have gone to the SEC this summer because they missed their chance.

The Big East's contract expires at the end of the 2012-13 year so they will be the only conference that could do anything to affect the Big 12's stability.

With the move to get TCU and their review of other Conference USA schools underway they could decide that the best thing for their conference is to split up the non-football and football teams in 2013, especially if Villanova doesn't upgrade. The football teams will then outnumber the non-football teams (9 vs 8) due to adding TCU so they would retain the Big East name and seat at the BCS table. If they could broker a deal sweet enough, they might be able to get Mizzou, Kansas, and Kansas State to make the jump away from Bevo's harem. Equal revenue sharing in a BCS league with around $6-8 million in annual TV revenue per team might be exactly what those schools could want. The basketball would still be really good with Louisville, Cincy, West Virginia, 'Cuse, and UConn in addition to those 3 midwestern schools. Divisions could be East/West with Mizzou, KU, K-State, TCU, Louisville, and Cincy in the Midwest and the others in the East.

Now, who knows if the Big East would be able to triple their TV $ on a per team basis at that time? Not certain, but the ACC more than doubled theirs in this last negotiation without expanding (it was their 2nd contract since adding BC, VT, and Miami). We are all expecting that the Pac-10/12 will more than triple their per team $ in this next go-round. So, technically it is possible, just depends on the market.

The non-football members (all private Catholic universities) and Notre Dame would then be able to form a non-football league and probably snag some other like-minded schools (Xavier, Saint Joseph's, St. Bonaventure, Duquesne, Fordham, etc.) for a very good basketball league.

The Big 12 would then have few choices but to add teams like New Mexico, Memphis, SMU, or UTEP to retain a 9 or 10 team membership.

If Mizzou, Kansas, and K-State have no desire to talk with the Big East, then I think the Big 12 remains intact for another 10-12 years; when the SEC's 2 major deals get close to renegotiations and then the Aggie and Sooner crowd will put pressure to join once again.

 

[ScottyBuff]

Here is a great link to "spoofing" the Longhorn Network:

What You Won't See on the Longhorn Network