Canzano: Oregon and Washington not holding up the Pac-12
Source: "No deal has even been presented for us to sign."
Some things I’ve learned this week:
• A Pac-12 Conference source told me this week that Oregon and Washington are NOT holding up the conference’s media rights negotiations. The process is moving slowly, but I’m told that’s not due to the Ducks and Huskies.
Said one involved party: “No deal has even been presented for us to sign a grant of rights.”
• I asked Bob Thompson — the retired FOX Sports Networks president, how the conference’s “grant of rights” works in conjunction with the media rights deal. He’s been on the inside of these negotiations. He explained that the TV deal gets done first, then the schools sign a fresh grant of rights.
Said Thompson: “If the schools approve the TV deal they will certainly approve a concurrent grant of rights.”
• I had Thompson examine the conference’s 10 remaining brands and the number television households associated with every Pac-12 market late last summer. He ranked the Pac-12 schools on estimated media-rights value. Thompson based the model on a five-year contract with an average payout of $350 million. Also, equal shares for the programs.
Thompson created a formula to measure market size, television households, football brand, win percentage, Olympic sports, fan support, and men’s basketball impact.
Here’s his ranking of the Pac-12 schools:
• The annual distribution figure used — $32.4 million per school — would put the Pac-12 slightly in front of the $31.7 million that the Big 12 negotiated.
• I drilled a little deeper with sources close to Oregon and Washington. The Ducks and Huskies do have some leverage. But would either school decide to wield it? Meaning, would UW or Oregon throw a wrench into the negotiation by asking for a larger distribution or ask for a shorter term to allow themselves maximum flexibility? Are Oregon and Washington making demands?
Said a high-level campus source at one of those two schools: “Oregon and Washington are highly motivated to see a deal done. Our schools have not slowed that down.”
• The Big Ten’s new seven-year media rights deal begins July 1, 2023, and runs through the end of the 2029-30 athletic year.
• The Pac-12 Networks may owe Comcast $50 million for overpayments over the last decade. Sorting that out could explain why the negotiation slowed. The prevailing thought is that Comcast would simply withhold $50 million in future payments. USC and UCLA would be on the hook for $4.17 million each, though.
• The Pac-12 also keeps a “rainy day” fund that showed a balance of $22.6 million in the conference’s last tax filing.
• Ana Mari Cauce — UW’s president — is on the executive committee of the Pac-12 CEO Group. That three-person committee will bring a proposal to the rest of the presidents and chancellors for a vote. Cauce would not likely put a media-rights deal up for vote if she was going to vote against it.
• The other two members of the Pac-12 CEO Group’s executive committee are Washington State president Kirk Schulz and Stanford president Marc Tessier-Lavigne.
• Remember, the conference is run by academics. The world of academia loves unanimous votes and consensus. Even if there’s division, be sure, the conference’s media-rights package will be approved by a 10-0 vote by the time the public sees it.
• There’s a possibility that the Pac-12 could offer larger shares of the postseason payouts to those who earn them. The Big Ten and SEC split the revenue from the CFP and NCAA Tournament equally among all members. There’s been some discussion among Pac-12 members about making those payouts merit-based with larger shares given to the programs that make the postseason. Keep an eye on that. Could be a way to keep those who invest more happier.
• The Trojans and Bruins officially depart for the Big Ten Conference on June 30, 2024. If the Pac-12 closes on a sale of the Pac-12 Networks prior to that date, the Trojans and Bruins would each receive 1/12 of the proceeds. On July 1, however, USC and UCLA relinquish their rights.
• I suspect the remaining 10 conference members would vote to make any sale or deal involving the Pac-12 Networks “effective July 1, 2024.”
• There are currently 122.4 million television households in the US. FOX, CBS, NBC and ABC are available over the air and can theoretically reach every one of those households. Keep that in mind as I sift through an important question facing the Pac-12 — go all-in with a streaming service? Or blend one in?
• Amazon Prime Video’s subscriber penetration rate is 45 percent of US internet households.
• There are 77.3 million members of Amazon Prime, but not all have broadband internet in their homes. 71 percent of Amazon Prime members (54.8 million members) watched Prime Video either on a mobile device or television last year.
• ESPN is available in 76 million households. Its streaming arm — ESPN+ — has roughly 24 million subscribers.
• Consumers spent $13.1 billion on subscriptions for streaming sports programming in 2022. That figure is expected to almost double to approximately $22.6 billion-a-year by 2027, according to researchers at Parks Associates.
• I bring all this up because the Pac-12 is considering a blend of traditional networks and a streaming service (Amazon). The temptation might be to beat the other major conferences to the finish line in the emerging streaming market.
By 2027, it won’t look bad. But industry insiders I know and trust think it’s too soon for the Pac-12 to go all-in. Especially given that the glow of ESPN’s platforms plays an important role in the College Football Playoff ecosystem.
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For $5/mo, Peacock gives me the Premier League and every WWE PPV event. Twenty years ago, just one WWE event was $50.
ESPN+, Disney, and Hulu are now folded into my Verizon Wireless subscription. For $100/mo I get those three services plus 5G talk and text. Verizon also just gave me a year of Netflix for signing up for NBA League Pass for $79. Good God.
The MLS package became available on Apple TV yesterday for $14.99/mo. Third-tier soccer for 3x what NBC charges for the world's most popular soccer league (plus a WHOLE lot more).
To suggest we'll be paying double to stream five years from now seems...ambitious.
All this to say, I'll be very interested to see what a Pac-12 streaming package looks like.
Great stuff John!