Longhorns 20yr $300M deal with ESPN

Discussion in 'College Football & the NFL Draft' started by hookinreds, Jan 19, 2011.

  1. hookinreds

    hookinreds Hall of Fame

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  2. Doppelganger

    Doppelganger None

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  3. keyser

    keyser Hall of Fame

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    Somewhere else I saw someone work out the math on this. It basically comes down to ESPN having the clout to force the channel onto the cable lineups all over Texas. Basically Disney (who owns ESPN, along with ABC and others) can say that certain stations only come as a package. No cable company is going to eliminate ESPN from the expanded cable packages, and then they're going to be told that it's a package deal to add this station.

    The contract averages $15 million a year, but I understand that only $10 million is guaranteed or something. Plus, it wasn't clear whether some existing licensing fell under the agreement, also. But, let's assume it's $15 million a year.

    Let's say they charge 20 cents a month for the new station to cable carriers (I think the cost for ESPN itself is more than 10 times that). That's $2.40 a year. You'd need 6.25 million cable subscribers to break even. That might seem like a lot, but if you consider all the cable networks in Texas are probably going to get enough demand to have to carry this, plus satellite subscribers, then throw in neighboring areas, it's not at all unreasonable. And, that doesn't count advertising revenue (of course, there are all the production costs, too).

    In any case, it's easy to see how ESPN will make money on this, and it's clearly a great deal for UT. Those of us who have absolutely no desire to watch this channel will probably end up being the ones to pay for it, though.
     
  4. Dutchrudder

    Dutchrudder COOL BEANS!

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    Don't you mean they would need 6.25 million new subscribers to break even? I can't imagine they would just toss this in with their current stuff and assume it makes money. After seeing that 300 million dollar number, I figured they would get most of their football season, but holy crap, only a couple games? It just seems awful risky on ESPN's part.
     
  5. keyser

    keyser Hall of Fame

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    They won't just toss it in - they'll toss it in and raise the price, making it more expensive than it used to be to leave it out. My understanding is that the companies (Disney in this case) will push to have entire packages adopted - so, they'll say "you get ESPN and ESPN2 and ESPNClassic and ESPNtu for $X". Then, if the cable company says they don't want ESPNtu, they'll find the price for the other channels has gone up.

    But, that's assuming some cable companies in Texas wouldn't want it. I'd guess that enough UT alumni/fans will want the channel that there will be a push for it, and the cable systems will go ahead and adopt it - the cost just gets passed on to everyone. And, the way this works is like most other cable channels - they price it wholesale and charge it to everyone. So, they don't need 6.25 million new subscribers, just 6.25 million existing subscribers to have it added to their package.

    Since it's interesting, and semi-relevant, here's an article with an (old) set of wholesale prices for each channel, on its own (ESPN costs $4.00 a month!):
    http://mediamemo.allthingsd.com/20100308/hate-paying-for-cable-heres-the-reason-why/#
    and here's one that talks about why bundling of channels is used:
    http://www.newyorker.com/talk/financial/2010/01/25/100125ta_talk_surowiecki
     
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  6. GlassHalfFull

    GlassHalfFull Subscribed Contributor

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    Byrne addresses new UT-ESPN network

     
  7. bah007

    bah007 Hall of Fame

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    I don't have a single problem with the Horns' new tv deal. I'm sure that's not surprising to most of you since I'm a UT fan.

    However, they shouldn't be allowed to show high school games. Those high school kids have no affiliation with the university.
     
  8. Dutchrudder

    Dutchrudder COOL BEANS!

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    What else are they gonna do with the 360 days worth of programming they need to fill? Seriously, the NFL Network isn't even watchable when the NFL season is over, and only tolerable during the season. Are they going to replay the UT/USC Championship game every Sunday morning? Maybe they could fill time with matthew McConaughey movies? I dunno, but that is a hell of a lot of time to fill.
     


  9. bah007

    bah007 Hall of Fame

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    Yea it is a lot of time to fill. But I think we're traveling down a slippery slope if we allow colleges to put their brand on high school games.
     
  10. Dutchrudder

    Dutchrudder COOL BEANS!

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    I agree it's not a good idea to have them on a collegiate network, but it does make sense to start televising high school games. Lebron James' high school games were on Pay Per View, which got him a lot more exposure. I'm sure there will be more guys like him that do deserve some TV coverage, but they need to find a network willing to run some of those games.
     
  11. pbat488

    pbat488 gig 'em

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    for my two cents....

    first, the horns did the right thing and got their own when they could... yes, I don't like that they have their own tv deal, but have to give them props for looking out for themselves...

    second, the high school thing is a very slippery slope.. if the ncaa allows it, it could/will be an extremely powerful recruiting device... seriously, if they want a certain recruit, they can go and televise and play up that certain players school or town or whatever.. very clever if it's allowed

    third, even though they're getting paid a lot of money, I think they will end up rueing the day they signed a 20 year deal... remember when notre dame signed their deal and everyone thought it was insane how much they were getting paid? well, I think the same will happen as other schools/conferences start making their own networks... right now, it's an insane amount of money, but a lot can change in the next 20 years.. unless there is some sort of opt out clause I haven't read about, I think the last 10 years could be a regret for the horn's administration, even though the first 10 will be such a financial success.
     
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  12. bah007

    bah007 Hall of Fame

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    I agree and I have no problem with high school games being televised. There are actually a lot of 5A matchups here in Texas that I wish I could watch.

    I just don't think it is appropriate if the network that shows it is owned by a university.
     
  13. Dan B.

    Dan B. Hall of Fame

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    That university owns the UIL:


    If the NCAA allows UT to run the UIL, why wouldn't they allow them to broadcast games? Doesn't UT currently negotiate UIL team TV appearances anyway?
     
  14. Doppelganger

    Doppelganger None

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    The UT channel is essentially a marketing and recruiting tool. In addition to having coach shows for Mack Brown and others, they will show the smaller revenue or negative revenue sports. Women's volleyball, track, softball, golf, swimming, tennis etc will be shown. This will be a huge recruiting tool for those sports. Can you imagine if you were a high school golf player and you were being pursued by various schools? Being able to play on TV and having your round on TV may entice you to go to UT over another school.

    Plus, it will help in recruiting for football, baseball, and basketball.
     

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