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re: SEC Network, the thread
Posted on 4/19/14 at 11:18 am to tmc94
Posted on 4/19/14 at 11:18 am to tmc94
quote:
I don't honestly think ESPN ever thought LHN was a winner. It was a means to an end and any comparison to the SECN is not very apt. It was simply the price of keeping a full scale bid war at bay a few more years.
For once I disagree with that analysis 100% tmc.
I DO think that the original LHN was thought to be a winner. In its original form, the form where the network could host high-school games and the state championship game, would have had greater appeal.
I also think ESPN was sold a line from sips that lower programs like Tech (and hell maybe even us one day) would eventually fall in line and agree to play on the network.
The LHN was an ambitious plan to make a "Texas" (as in the state) network. It only failed because the ESPN executives missed two things:
1. The fact that having high-school games on the network would be ok. Again I am sure sip leaders assured them it would be ok, only for us to take it to the NCAA and strike it down year 1.
2. The fact that programs like Tech have more pride than they thought. They were right they could get some level of teams playing on there (ala Texas St. and UTSA), but it is obvious they assumed the level of Tech, Baylor, TCU would play ball as well. When Tech showed some backbone it became apparent that Texas didn't rule the state like they told their buddies at ESPN.
I think the reason it continues to exist is due to the fact that without it there would be major conference realignment where ESPN might lost important properties to the Fox controlled B1G or the split-controlled PAC.
But I don't think the grand plan was for it to be a stop-gap from the beginning. The grand plan was that they could turn the LHN into something any football fan in Texas would want to watch.
And maybe they could have had that if we would have gone along with it.
This post was edited on 4/19/14 at 11:20 am
1
Posted on 4/19/14 at 1:07 pm to cardboardboxer
I don't think us "going along with it" really made much difference. I think all those things ESPN knew full well weren't going to happen (for instance, tu only owns 1 OOC game per year per Big 12 contract so things like Tech appearing are irrelevant). You're assuming ESPN was the naive party here. Simply not buying that.
Looking back a few things are very clear:
- LHN was being worked on prior to conference realignment. ESPN however didn't enter the picture until conference realignment went in motion
- ESPN carriage rates have skyrocketed. They are up 50% in the last 3 years and project another 50% growth over the next 3. That has a lot to do with how valuable live content is. This is why ESPN is willing to pay $100m+ per MNF telecast and $80m for the Rose and Sugar (both are long-term contracts)
- this inflation means that long-term contracts signed prior to it are woefully undervalued.
- had the Big 12 imploded, Texas and OU likely would have ended up in the PAC (or B1G) and ESPN would lose those properties altogether (and a grossly undervalued T1 contract)
- wholesale realignment may have also opened Pandora's box since most of the contracts have look-in provisions. The look-ins really are designed to mark-to-market. However, if everyone is making say, $20m, then the market is $20m. But if a top conference, like the PAC or B1G was able to go to open market with an upgraded product, the market might have exploded to $30m. Then how can you tell the SEC (or whomever) that has a look-in provision that they are at market? You can't. The reduced revenue would be enormous (SEC would be $140m/year).
- The long-term biggest threat to ESPN isn't Fox or NBC or CBS. It's league branded channels that actually own the content. NFLN. MLBN. NHLN. BTN and PACN are rivals and common sentiment seems to be both conferences will stop their partnership with ESPN in the next contract cycle. It's absolutely vital that they keep top properties away from both conferences (and keep other conferences from entering that business without them)
You can take all these facts and say ESPN decided to overpay market by leaps and bounds and just got lucky with how it turned out. But I just don't think so. I'm not saying they planned it to lose money. But so what if it did?
ESPN locked in their T1 Big 12 deal under market (how much is tu-OU worth alone?), kept the overall CFB market status quo with long-term contracts in place, and prevented a potential rival entity for 20-years. $15m/year is chump change for that. But they aren't even out that full amount as it does generate some revenue to offset costs.
Looking back a few things are very clear:
- LHN was being worked on prior to conference realignment. ESPN however didn't enter the picture until conference realignment went in motion
- ESPN carriage rates have skyrocketed. They are up 50% in the last 3 years and project another 50% growth over the next 3. That has a lot to do with how valuable live content is. This is why ESPN is willing to pay $100m+ per MNF telecast and $80m for the Rose and Sugar (both are long-term contracts)
- this inflation means that long-term contracts signed prior to it are woefully undervalued.
- had the Big 12 imploded, Texas and OU likely would have ended up in the PAC (or B1G) and ESPN would lose those properties altogether (and a grossly undervalued T1 contract)
- wholesale realignment may have also opened Pandora's box since most of the contracts have look-in provisions. The look-ins really are designed to mark-to-market. However, if everyone is making say, $20m, then the market is $20m. But if a top conference, like the PAC or B1G was able to go to open market with an upgraded product, the market might have exploded to $30m. Then how can you tell the SEC (or whomever) that has a look-in provision that they are at market? You can't. The reduced revenue would be enormous (SEC would be $140m/year).
- The long-term biggest threat to ESPN isn't Fox or NBC or CBS. It's league branded channels that actually own the content. NFLN. MLBN. NHLN. BTN and PACN are rivals and common sentiment seems to be both conferences will stop their partnership with ESPN in the next contract cycle. It's absolutely vital that they keep top properties away from both conferences (and keep other conferences from entering that business without them)
You can take all these facts and say ESPN decided to overpay market by leaps and bounds and just got lucky with how it turned out. But I just don't think so. I'm not saying they planned it to lose money. But so what if it did?
ESPN locked in their T1 Big 12 deal under market (how much is tu-OU worth alone?), kept the overall CFB market status quo with long-term contracts in place, and prevented a potential rival entity for 20-years. $15m/year is chump change for that. But they aren't even out that full amount as it does generate some revenue to offset costs.
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