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How The SEC Network Took Off

Jason Barrett

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Mike Slive knew that if the Southeastern Conference wanted to increase its revenue, a conference television network would be a good idea.

But Slive, who stepped down in May after nearly 13 years as commissioner of the SEC, realized the timing wasn’t right to launch a network in 2009 when the SEC’s deals with ESPN and CBS were up for renewal, according to several athletic directors who were involved in the process. The Big Ten had already launched its network, but the economy was in recession, and rumors of more conference realignment were picking up.

Slive decided to wait.

That decision proved extremely lucrative for  the commissioner and the rest of the SEC. The conference later added Missouri and Texas A&M in 2011, increasing the SEC’s cable television footprint by more than 10 million homes, according to Nielsen data, and giving Slive the ammo he needed to move forward with a network.

The SEC Network, which celebrated its first birthday on Aug. 14, was more successful than anyone could have imagined. After the most successful network launch in cable television history, the SEC Network has a market value of $4.77 billion, according to research firm SNL Kagan. By comparison, the Big Ten Network, which launched in 2007, has a value of $1.59 billion.

How did the SEC Network blow away the competition in its first year? It starts with the fans.

“The SEC’s passion and devotion is clearly showing through here,” said Jeff Nelson, vice president of client strategy at Navigate Research. “People wanted the network and were willing to pay for the network.”

Even the most casual observer knows the South is crazy about college football. Like, run full speed inside Bryant-Denny Stadium to get Nick Saban‘s autograph crazy. It’s what brings people together and gives them an endless supply of things to talk about year-round.

That passion made up the backbone of the SEC Network’s appeal to cable providers. While the Big Ten Network battled with providers for years, the SEC Network was available in 90 million homes when it launched. The reason was simple: The cable providers knew they’d risk losing customers, particularly ones in the SEC’s footprint if it didn’t provide the network.

When AT&T U-Verse considered whether it’d add the SEC Network when it launched, it evaluated the intensity of the average SEC viewer, looking at how often and how long they watched SEC sports. What AT&T learned was that “the subscriber intensity on viewership was off the charts for what we normally see for sports,” according to Ryan Smith, vice president of content for AT&T. U-Verse, which became the first provider to sign on, even hoped other providers didn’t distribute the network immediately so they could add additional customers.

“Some of the other college conferences they do well but far and away the SEC is the most intense and has the strongest viewership of really any of those conferences,” Smith said.

Knowing it had an army of passionate viewers up its sleeve, the SEC Network negotiated an aggressive subscriber fee of $1.30 or $1.40, depending on the provider, for its 30 million in-market subscribers. That’s significantly higher than either the Big Ten or Pac-12 network rates. When adding a $0.25 out-of-market rate (outside SEC footprint), the network has an average subscriber fee of $0.66 in the 66 million subscriber homes it averaged in its first year, according to SNL Kagan.

On the conservative end, that’s $576 million in revenue without even factoring in advertising.

“That a network covering 14 schools in 11 states in this country could generate that much traction early on and that much distribution,” Mississippi State athletic directorScott Stricklin said, “it speaks to all the things we know are special about this league.”

Power of ESPN

The SEC took a different approach when it launched its network. While the Pac-12 retained full ownership in its network, which has struggled to get widespread distribution, the SEC partnered with ESPN to launch the SEC Network. The SEC doesn’t have an ownership stake in the network — ESPN has full ownership — but instead negotiated a revenue split with the sports television power.

ESPN and the SEC declined to provide the exact terms of the arrangement, but it is believed to be a little less than a 50/50 split. That could limit the long-term revenue potential for the SEC and its schools — the Big Ten still owns a little less than half of its network — but gave it a tremendous advantage when initially negotiating carriage agreements.

Any resistance the network might have faced, ESPN could muscle its way through. ESPN was able to sell the network under its umbrella of other properties, including its main ESPN channel and ESPN2, making it almost impossible for cable providers to say no. It guaranteed that the SEC Network wouldn’t get relegated to a distant channel you can’t find the way CBS Sports Network and others have in recent years.

The Pac-12, without a powerful friend like ESPN, has struggled fighting its way out of premium packages and into markets. Larry Scott, the Pac-12’s commissioner, has publicly stated he was “disappointed that DirecTV has been willing to negotiate with ESPN for the SEC Network but not Pac-12” and that it showed the provider was more interested in dealing with conglomerates.

“When ESPN gets behind something and puts its resources with a new initiative like the SEC Network, it’s an impressive thing to watch and see,” said Justin Connolly who oversaw the launch as senior vice president of college networks for ESPN. “No doubt we benefited there.”

ESPN added credibility to the operation and helped cable providers feel comfortable that the content would be high quality. The network had already launched the Longhorn Network, focused all on the University of Texas, and learned through trial-and-error what the SEC Network would need to be successful. While the Longhorn Network hasn’t met expectations, its failures taught ESPN a valuable lesson and helped power the unprecedented success of the SEC’s television channel.

Connolly, who is now executive vice president of affiliate sales and marketing for Disney and ESPN, relied on veterans who had experience launching networks, programming shows and televising games.

To read the rest of this article visit AL Today where it was originally published

Sports TV News

The NFL Still Considering Multiple Offers For Sunday Ticket

The NFL has had the respective bids of Disney, Apple and Amazon for weeks now. DirecTV has not bid for the package but has stated it is willing to partner with the new rightsholder for a potential deal.

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Sunday Ticket Negotiations

DirecTV currently has the rights to Sunday Ticket. That deal expires at the end of this upcoming football season. The NFL is expected to make a boatload of cash when they decide which media organization gets the next rights to the package. The only question is… who will that be?

Alex Sherman of CNBC reports that the NFL has had the respective bids of Disney, Apple and Amazon for weeks now. DirecTV has decided not bid for the package. However, they are interested in partnering with the new rightsholder for a potential deal. DirecTV knows that Sunday Ticket is a staple in bars and restaurants and is interested in maintaining those relationships.

Outside of the bar/restaurant industry, success has been limited for the satellite provider with the football package. Fewer than two million subscribers signed up for Sunday Ticket each year which made the package a money-loser for the satellite TV provider.

According to the report, the NFL wants more than $2 billion for the rights and a stake in NFL Media, which is being packaged with Sunday Ticket. Also on the table is the NFL’s mobile rights. The league’s previous mobile agreement with Verizon has ended.

An interesting piece of the negotiations is Sunday Ticket price. According to the report, a buyer would have limited flexibility on pricing. The NFL signed contracts with CBS and Fox and within the framework of those deals, language mandates Sunday Ticket have a premium price. That’s to prevent loss of viewers from the networks that feature local market Sunday afternoon games. So essentially, the price is the price for the consumer.

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Sports TV News

F1 Renews With ESPN For U.S. Media Rights

ESPN was reportedly in a three-way bidding battle with Amazon and Comcast. According to the report, F1 told both Amazon and Comcast on Friday that they had decline to accept either one’s offer.

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F1 ESPN

The racing series F1 has decided to stick with ESPN through 2025.

ESPN was reportedly in a three-way bidding battle with Amazon and Comcast. According to the report, F1 told both Amazon and Comcast on Friday that they had decline to accept either one’s offer.

The reported value of the three-year contract is set to pay F1 $75-90M per year for the U.S. media rights. Amazon had offered to pay roughly $100M per year, with the right to sublicense to a linear broadcast network. Comcast’s offer was similar to ESPN’s in terms of value and the structure. They also wanted to put select races on it’s streaming service, Peacock.

Netflix was in on the negotiations, as well. The makers of Drive to Survive, the streaming series that many credit with the sport’s explosion in popularity in recent years, wasn’t close on on their financial offer. Also, it seems F1 executives were not ready to put all of its races on a streaming service just yet.

Currently, F1 receives $5M per year for ESPN to broadcast it’s races. ESPN has grabbed about 1.0 million viewers per race. That makes F1 a more than viable option for the network to invest into again. ESPN will be able to put a small number of races on its ESPN+ streaming service exclusively. The vast majority being on ABC or ESPN.

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Sports TV News

Skip Bayless Says He And Stephen A. Smith ‘Sorted Out’ Their Disagreement

“Brothers fight. We have fought before. I’m assuming we will fight again.”

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Skip Bayless

Stephen A. Smith and Skip Bayless were locked in a war of words last week following the First Take host’s appearance on JJ Redick’s Old Man and the Three podcast.

The origins of their partnership were discussed and Bayless admitted he did not like the way Smith characterized the state of First Take before he arrived on set. Smith insisted that Bayless simply misunderstood what he meant by saying that he was told the show needed him.

Over the weekend, Skip Bayless says he and Stephen A. Smith got together at the Bayless home in California to talk things out in private.

“He was in LA, he came over, we sat by the pool,” he said on the latest episode of The Skip Bayless Show. “It wasn’t the easiest conversation for a while, but we slowly but surely sorted it out. We got through it, and we have been through so much together.”

Bayless reiterated that he considers Smith a brother. They love each other. That doesn’t mean they are always going to remember events the same way or see eye-to-eye all the time.

“Brothers fight. We have fought before. I’m assuming we will fight again.”

Fighting doesn’t mean the relationship is fractured. In fact, Skip Bayless was adamant that he remains closer to Smith than he is to most people in his life.

“I don’t trust easily because of the way I was raised, but I do trust Stephen Anthony Smith. Trust him with my life. Always have and always will. I trust he will always be there for me, and you better believe I will always be there for him.”

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