ACC panel will study whether to launch net
By Michael Smith & John Ourand, Staff Writers
Published January 14, 2013
The ACC has formed a committee of athletic directors and hired Wasserman Media Group to explore the financial benefits of launching its own conference network.
While its media rights are tied up with ESPN for the next 15 years, that hasn’t stopped the conference from beginning the process of deciding whether such a channel is feasible. It hasn’t had formal talks with ESPN, which would have to play a big role in any ACC channel since the network controls the league’s rights.
But ACC Commissioner John Swofford has quietly been exploring a branded channel and began floating the idea for it in the fall, around the time that Notre Dame joined the league in all sports but football. The Fighting Irish have committed to play five ACC opponents in football each season, but it will maintain its independence.
For the ACC, it potentially could allow the conference to keep up financially with the Big Ten, Pac-12 and SEC, which have all launched or are close to launching branded channels, and sources say the conference sees it as an enticement to keep schools from being seduced by other conferences.
Sources also say there continues to be angst among the conference’s presidents and athletic directors over the league’s ability to keep up with its peer conferences financially. The Big Ten lured Maryland, a charter member of the ACC, away from the conference with its future media revenue projections. The Big Ten’s numbers, buoyed by the growth of its channel, showed that each school’s revenue will rise to more than $40 million by 2020, compared with $24 million in the ACC.
This past year, the Big Ten led all conferences with a per-school payout of $24 million, compared with the ACC’s payout of $13 million. Launching a channel would address those financial concerns because it would represent a major dual revenue stream of license fees from distributors and advertising revenue.
Maryland administrators cited the Big Ten Network as a main drawing card for its decision to leave the ACC for the Big Ten, which it is expected to join in 2014. Persistent rumors have some ACC schools exploring conference options, although the league’s presidents have publicly stated their commitment to stay.
Wasserman Media Group was brought on board to consult with the ACC’s athletic directors on future plans. Dean Jordan in WMG’s Raleigh, N.C., office will lead the agency’s relationship with the conference. He also consulted with the ACC when it renegotiated its TV contract with ESPN last year. Jordan will be working with Swofford and all of the ACC’s athletic directors on the TV committee, except for Maryland’s Kevin Anderson because of the Terrapins’ exit.
ESPN would represent a major voice in any channel launch and it is believed to be lukewarm on forming one, according to sources close to the discussions. ESPN currently has a contract to pay the ACC $3.6 billion over 15 years — averaging $240 million a year — for the conference’s media rights. It then sublicenses a syndication package to Raycom Sports, which, in turn, sublicenses some rights to Fox Sports Net.
To start a channel, the ACC believes that it needs something along the lines of 30 to 35 football games a year. Plus, it wants the rights to re-air games. It remains to be seen how many basketball games the conference would seek for a channel, but the Big Ten Network, by comparison, airs live more than 40 football games, 105 men’s basketball games and 55 women’s basketball games each season.
The ACC would draw its inventory of live games either from ESPN’s inventory — primarily the games that air on ESPN3 — or Raycom’s syndicated package.
To start a channel, it’s also expected that the ACC would roll its sponsorship and digital rights into one entity with the channel. Raycom currently holds the ACC’s digital and corporate sponsor rights.
Another reason for ESPN’s reluctance to move forward is that it is preparing to launch an SEC channel in August 2014, sources said, which would make it difficult to launch an ACC channel in many of those same markets, like Florida, Georgia and South Carolina where the SEC and ACC footprints overlap.
Plus, ESPN’s experience with branded college channels has been difficult in Texas, where it has had problems getting significant distribution for Longhorn Network.
The ACC, however, is hoping that its channel could work alongside any SEC channel. If the SEC channel is headquartered in ESPN Regional Television’s offices in Charlotte, an ACC channel could be stationed within that same infrastructure.
Charlotte-based Raycom could be the hub for such a channel as well.
Any obstacle is distribution, as distributors almost certainly would resist paying for an ACC channel. DirecTV, Comcast and Time Warner Cable are the biggest distributors in the ACC’s territory. Each operator has complained about the cost of sports rights and has had public battles with networks to keep those costs down.
There is no clear consensus inside the ACC on whether it has either the game inventory or the brand strength to make a channel work. But the conference clearly is following the lead of its peers among the big five conferences.
The Big Ten pioneered the strategy in 2007 when it launched its own channel with Fox. The Pac-12 launched multiple regional networks last year, and the SEC is formulating plans to start a channel with ESPN next year.
The outlier among the big five conferences is the Big 12. Commissioner Bob Bowlsby confirmed last week that the Big 12 will not be launching its own channel since all of the conference’s game inventory is tied up in deals with ESPN and Fox. Most of the 10 schools in the Big 12 have sold their third-tier TV games to Fox as part of separate deals, while Texas partnered with ESPN on the Longhorn Network.
http://www.sportsbusinessdaily.com/Journal/Issues/2013/01/14/Colleges/ACC.aspx
