Very long read from the San Jose Mercury News which is for subscribers only but I managed to weasel in and copy Section 10. Note the following comment from the article:
“What about the Pac-12 Networks? The Hotline doesn’t expect them to exist in linear form starting in the summer of 2024; nor do we expect them to show any football or men’s basketball content.”
10. The Pac-12 will blow past expectations with its media rights contract.
First, let’s address the timing. The contracts with ESPN and Fox — and the Pac-12 Networks distribution partners — expire in the summer of 2024, which would point to next winter as the start of negotiations for the next contract cycle. However, we believe the process could be expedited.
The networks currently are negotiating with the Big Ten. Once those conclude (in the late spring or early summer), they could quickly pivot to the Pac-12 and wrap everything up by the end of 2022. We wouldn’t bet on that outcome, but it’s possible.
We predict the key pieces for the Pac-12’s next media rights contract will look something like this:
— The terms. Let’s first define the discussion: The annual revenue distributions to each campus — the numbers that get so much media attention — include revenue from March Madness and the College Football Playoff. Our projections are limited to Pac-12 distribution rights for regular-season broadcasts (football and men’s basketball) and the football championship game.
Two factors shape our projections: 1) The sizzling market for live sports (see: the recent NFL and MLB media deals); and 2) the coterminous nature of the Pac-12 rights.
One of the few things former commissioner Larry Scott got right with the media strategy was to ensure that all contracts expired at the same time — in the summer of ’24. That will allow Kliavkoff to saddle to the negotiating table with the football and basketball inventory currently on Fox and ESPN and the 36 football games on the Pac-12 Networks.
With scale comes leverage and flexibility. In our opinion, the Pac-12’s next media rights deal will bring an average annual value of $600 million, which breaks down to $50 million per school over the course of the deal. (The Year One value would be less, assuming an escalator of three or four percent.)
For context, recall that the existing 12-year, $3 billion deal with Fox and ESPN averages $250 million annually ($21 million per school). So yes, we expect the average value to more than double — in part because of market forces, in part because 36 football games will be added to the inventory. (Those games are worth far more to the conference within a package sold to ESPN and Fox than they have been on the Pac-12 Networks.)
The duration of the contract cycle could be eight years, 10 years, perhaps even 12 years — but whatever the length, it will assuredly have an option to reassess midway through.
— The partners. As the current rights-holders, ESPN and Fox have an exclusive negotiating window with the Pac-12. The conference can discuss options with other potential partners, but it cannot engage in formal negotiations with CBS, NBC, Amazon, etc., unless ESPN and Fox are unable (or unwilling) to lock up the Pac-12 during the exclusive window.
We believe they will lock it up, with the end result looking something like this:
* The ‘Game of the Week’ package, featuring late-afternoon kickoffs. Most of these games will be shown over-the-air on FOX and CBS (through a sub-licensing agreement with ESPN and Fox).
* The afternoon array. Most Pac-12 games will be played during daylight and scattered across several networks, from ESPN and ESPN2 to FS1 and perhaps CBS Sports Network. We wouldn’t be surprised if a second sub-licensing deal allows for games on the Turner networks.
* The streaming services. We foresee a handful of games (perhaps one per week) to air on digital platforms like ESPN+ or Paramount+. (There’s no indication Amazon is interested in college football. If it doesn’t want the Big Ten, we can’t envision it nibbling on the Pac-12.)
What about the Pac-12 Networks? The Hotline doesn’t expect them to exist in linear form starting in the summer of 2024; nor do we expect them to show any football or men’s basketball content.
However, as a standalone property, they could serve as a streaming service for Pac-12 Olympic sports. Also, don’t discount the potential for ESPN to buy them as part of the deal that includes football and men’s basketball inventory.
(There are myriad possible outcomes for the Pac-12 Networks and the conference’s media rights in general. This is merely our best guess based on the current landscape. Once the Big Ten negotiations conclude, we’ll have more clarity.)
So there you have it … the Hotline’s projections, on the field and off, for the Pac-12 in the 2022-23 sports cycle.
“What about the Pac-12 Networks? The Hotline doesn’t expect them to exist in linear form starting in the summer of 2024; nor do we expect them to show any football or men’s basketball content.”
10. The Pac-12 will blow past expectations with its media rights contract.
First, let’s address the timing. The contracts with ESPN and Fox — and the Pac-12 Networks distribution partners — expire in the summer of 2024, which would point to next winter as the start of negotiations for the next contract cycle. However, we believe the process could be expedited.
The networks currently are negotiating with the Big Ten. Once those conclude (in the late spring or early summer), they could quickly pivot to the Pac-12 and wrap everything up by the end of 2022. We wouldn’t bet on that outcome, but it’s possible.
We predict the key pieces for the Pac-12’s next media rights contract will look something like this:
— The terms. Let’s first define the discussion: The annual revenue distributions to each campus — the numbers that get so much media attention — include revenue from March Madness and the College Football Playoff. Our projections are limited to Pac-12 distribution rights for regular-season broadcasts (football and men’s basketball) and the football championship game.
Two factors shape our projections: 1) The sizzling market for live sports (see: the recent NFL and MLB media deals); and 2) the coterminous nature of the Pac-12 rights.
One of the few things former commissioner Larry Scott got right with the media strategy was to ensure that all contracts expired at the same time — in the summer of ’24. That will allow Kliavkoff to saddle to the negotiating table with the football and basketball inventory currently on Fox and ESPN and the 36 football games on the Pac-12 Networks.
With scale comes leverage and flexibility. In our opinion, the Pac-12’s next media rights deal will bring an average annual value of $600 million, which breaks down to $50 million per school over the course of the deal. (The Year One value would be less, assuming an escalator of three or four percent.)
For context, recall that the existing 12-year, $3 billion deal with Fox and ESPN averages $250 million annually ($21 million per school). So yes, we expect the average value to more than double — in part because of market forces, in part because 36 football games will be added to the inventory. (Those games are worth far more to the conference within a package sold to ESPN and Fox than they have been on the Pac-12 Networks.)
The duration of the contract cycle could be eight years, 10 years, perhaps even 12 years — but whatever the length, it will assuredly have an option to reassess midway through.
— The partners. As the current rights-holders, ESPN and Fox have an exclusive negotiating window with the Pac-12. The conference can discuss options with other potential partners, but it cannot engage in formal negotiations with CBS, NBC, Amazon, etc., unless ESPN and Fox are unable (or unwilling) to lock up the Pac-12 during the exclusive window.
We believe they will lock it up, with the end result looking something like this:
* The ‘Game of the Week’ package, featuring late-afternoon kickoffs. Most of these games will be shown over-the-air on FOX and CBS (through a sub-licensing agreement with ESPN and Fox).
* The afternoon array. Most Pac-12 games will be played during daylight and scattered across several networks, from ESPN and ESPN2 to FS1 and perhaps CBS Sports Network. We wouldn’t be surprised if a second sub-licensing deal allows for games on the Turner networks.
* The streaming services. We foresee a handful of games (perhaps one per week) to air on digital platforms like ESPN+ or Paramount+. (There’s no indication Amazon is interested in college football. If it doesn’t want the Big Ten, we can’t envision it nibbling on the Pac-12.)
What about the Pac-12 Networks? The Hotline doesn’t expect them to exist in linear form starting in the summer of 2024; nor do we expect them to show any football or men’s basketball content.
However, as a standalone property, they could serve as a streaming service for Pac-12 Olympic sports. Also, don’t discount the potential for ESPN to buy them as part of the deal that includes football and men’s basketball inventory.
(There are myriad possible outcomes for the Pac-12 Networks and the conference’s media rights in general. This is merely our best guess based on the current landscape. Once the Big Ten negotiations conclude, we’ll have more clarity.)
So there you have it … the Hotline’s projections, on the field and off, for the Pac-12 in the 2022-23 sports cycle.
