Williams/Blum Pod: It's time to start talking the next round of TV contracts

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cyman05

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Random thoughts from another sports media geek:
  • I've heard rumblings (I believe Jon Wilner from the P12) that the Big 10 is likely to go all in with Fox just as the SEC is now all in with ABC/ESPN...
  • As far as being worried about inventory for ABC/ESPN, they're only picking up 1 game a week with the SEC (albeit the biggest one). So if the B10 (and possibly P12) leave ABC/ESPN altogether, I wouldn't worry about inventory space being an issue for Disney if they want the B12. And I think Bowlsby is betting on either a long-term relationship with Disney as part of the ESPN+ deal getting set up or tech companies stepping up.
  • You mentioned the CBS time slot. Yeah, who knows if they are interested in keeping college football or not, but the ACC wouldn't be a competitor. It'd either be B12, Pac12, or a group of 5. The ACC is locked up all-in with Disney for a long-time as part of their deal to gain the ACC network. They need that network to come through big time, or else they're going to be in big trouble financially years down the road.
  • You were wondering about timing for negotiations starting. Yes, they're going to be starting fairly soon. That's exactly why the Pac12 decided to move on from Larry Scott when it did. I want to say they're going to be starting talks this summer and you need to know who is in charge.
  • Realignment- I agree that I don't see anything major happening, but who knows. I just don't see anyone moving, especially with all these legal disputes in place (e.g. NIL) and financial uncertainties with COVID. Plus at some point schools are going to continue to recognize that wins are going to be more important than a marginal increase in revenue because wins= revenue. As you said, why would TX, OK leave for the SEC to gain an extra $10M? Possibly recruiting, but if you're OK why screw up a good thing? Although it will not happen, I think you're just as likely to see a school move to the B12 as vice versa.
  • Streaming- I fully agree that a conference going with a streaming provider is much more likely today versus 2 years ago. But there is still some additional value in linear TV versus streaming if money is equal. But if you're going with a streaming partner it will need to be Amazon, Apple, etc as opposed to a DAZN. The question for someone like Amazon is would you rather grow your subscriber base in somewhere like the midwest or a different market base? You probably get more bang for your buck in the B12 with loyal fanbases but is Amazon prime as profitable in somewhere like Iowa where the population is more spread out for shipping versus high population density centers? Will be interesting to see how this plays out.
  • Grant of rights- One thing you didn't touch on was the grant of rights. Presumably, this will get extended in order to guarantee to the TV contract holder(s) who the TV inventory will consist of. Do Texas and Oklahoma ask for some sort of concessions from the rest for signing it? How long will it go for? What happens to the Longhorn network when it's set to expire??
  • I don't think most fans realize how critical this topic is for Iowa State athletics. If your conference falls too far behind not only are you missing out on tens of millions if not hundreds of millions of dollars to help create continuous competitive facilities and funding for your teams, but some teams will eventually get wandering eyes and who knows what happens at that point. Luckily I don't think we're close to that spot right now.
 

brentblum

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Random thoughts from another sports media geek:
  • I've heard rumblings (I believe Jon Wilner from the P12) that the Big 10 is likely to go all in with Fox just as the SEC is now all in with ABC/ESPN...
  • As far as being worried about inventory for ABC/ESPN, they're only picking up 1 game a week with the SEC (albeit the biggest one). So if the B10 (and possibly P12) leave ABC/ESPN altogether, I wouldn't worry about inventory space being an issue for Disney if they want the B12. And I think Bowlsby is betting on either a long-term relationship with Disney as part of the ESPN+ deal getting set up or tech companies stepping up.
  • You mentioned the CBS time slot. Yeah, who knows if they are interested in keeping college football or not, but the ACC wouldn't be a competitor. It'd either be B12, Pac12, or a group of 5. The ACC is locked up all-in with Disney for a long-time as part of their deal to gain the ACC network. They need that network to come through big time, or else they're going to be in big trouble financially years down the road.
  • You were wondering about timing for negotiations starting. Yes, they're going to be starting fairly soon. That's exactly why the Pac12 decided to move on from Larry Scott when it did. I want to say they're going to be starting talks this summer and you need to know who is in charge.
  • Realignment- I agree that I don't see anything major happening, but who knows. I just don't see anyone moving, especially with all these legal disputes in place (e.g. NIL) and financial uncertainties with COVID. Plus at some point schools are going to continue to recognize that wins are going to be more important than a marginal increase in revenue because wins= revenue. As you said, why would TX, OK leave for the SEC to gain an extra $10M? Possibly recruiting, but if you're OK why screw up a good thing? Although it will not happen, I think you're just as likely to see a school move to the B12 as vice versa.
  • Streaming- I fully agree that a conference going with a streaming provider is much more likely today versus 2 years ago. But there is still some additional value in linear TV versus streaming if money is equal. But if you're going with a streaming partner it will need to be Amazon, Apple, etc as opposed to a DAZN. The question for someone like Amazon is would you rather grow your subscriber base in somewhere like the midwest or a different market base? You probably get more bang for your buck in the B12 with loyal fanbases but is Amazon prime as profitable in somewhere like Iowa where the population is more spread out for shipping versus high population density centers? Will be interesting to see how this plays out.
  • Grant of rights- One thing you didn't touch on was the grant of rights. Presumably, this will get extended in order to guarantee to the TV contract holder(s) who the TV inventory will consist of. Do Texas and Oklahoma ask for some sort of concessions from the rest for signing it? How long will it go for? What happens to the Longhorn network when it's set to expire??
  • I don't think most fans realize how critical this topic is for Iowa State athletics. If your conference falls too far behind not only are you missing out on tens of millions if not hundreds of millions of dollars to help create continuous competitive facilities and funding for your teams, but some teams will eventually get wandering eyes and who knows what happens at that point. Luckily I don't think we're close to that spot right now.
Great stuff! Appreciate your insights, this is fascinating.
 

theshadow

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RE: postponed games

There are still 15 MBB games across the conference that aren't on the schedule.

Baylor has 6 to make up.
5 - TCU
4 - Tech and UT
3 - ISU and WVU
2 - OU and OSU
1 - KSU

It won't be possible to get them all. At most, there are 3 dates available before the tournament (March 2, March 4-5, March 7).

I could see the priority for makeups being the top half of the league -- especially if they have games left against the bottom half. Second priority might be the closest trips, to help any tight scheduling.
 
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brentblum

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RE: postponed games

There are still 15 MBB games across the conference that aren't on the schedule.

Baylor has 6 to make up.
5 - TCU
4 - Tech and UT
3 - ISU and WVU
2 - OU and OSU
1 - KSU

It won't be possible to get them all. At most, there are 3 dates available before the tournament (March 2, March 4-5, March 7).

I could see the priority for makeups being the top half of the league -- especially if they have games left against the bottom half. Second priority might be the closest trips, to help any tight scheduling.
Good info, will be a wild scramble.
 
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agrabes

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Not having listened to the podcast yet, I will say I think that Williams and others overestimate the role of the streaming companies in college football media rights. Not because the fans wouldn't watch on those streaming services or that the sport would lose viewers by doing it. But because it is likely not a good business decision for the streaming services.

We would be looking at companies like Amazon, Netflix, Google, and potentially Apple competing with Disney/ESPN, Fox, and CBS. In order to get the rights to college football, one or more of the streaming companies would have to bid higher than the existing competitors. There are some hurdles to get over.

The business model is different for the streamers vs. the broadcast networks. The networks make money from advertisers. They get paid based on how much an advertiser thinks it's worth to put ads on the content. The streamers get paid based on subscription only. Not that they couldn't develop an advertisement pay model, but they are not experts at it. This puts the streamers in two major disadvantages:

1) Under the subscription revenue model (assuming advertising is not used or not used significantly), spending billions on College Football is not a smart business move. The way a company like Netflix makes money is by drawing and keeping subscribers. So for it to be worth it to them to buy in, there would have to be a significant number of people who would subscribe to the service who didn't before, or who would be willing to pay a higher subscription. That's a pretty high hurdle to clear. I don't think many people would subscribe to Amazon Prime for CFB who didn't subscribe already for other reasons.

2) If they do decide to go to a hybrid subscription/advertisement model, they're less experienced at it vs. the networks. It would be tough for them to outbid the networks going toe to toe on the same business model. Would one of them be willing to take a significant loss to get a major CFB deal? Maybe. But the next question is - what's in it for them? I think they would be willing to take a loss if it could open up opportunities for them. But what is the opportunity?

I think if one of the streamers picks up a CFB contract, it would be one of the Group of 5 conferences or at best the ACC. Hedge their bets and get in at a lower risk level to gain experience. Then, in the next round they might be ready to fully buy in if it makes sense based on the business environment.
 

theshadow

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Good info, will be a wild scramble.
At a glance, I see these 8 making the first cut:

Texas at Baylor
TCU at Baylor
TCU at Tech (they haven't played yet; need a HTH tiebreaker)
OSU at WVU (otherwise WVU would be 3 home games short)
ISU at KSU
ISU at Tech
Texas at OU
Baylor at OU

With those, KU/KSU/OU would get all 18 in.
OSU/ISU with 17
UT/TTU/WVU with 16
BU/TCU with 15
 

KnappShack

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Not having listened to the podcast yet, I will say I think that Williams and others overestimate the role of the streaming companies in college football media rights. Not because the fans wouldn't watch on those streaming services or that the sport would lose viewers by doing it. But because it is likely not a good business decision for the streaming services.

We would be looking at companies like Amazon, Netflix, Google, and potentially Apple competing with Disney/ESPN, Fox, and CBS. In order to get the rights to college football, one or more of the streaming companies would have to bid higher than the existing competitors. There are some hurdles to get over.

The business model is different for the streamers vs. the broadcast networks. The networks make money from advertisers. They get paid based on how much an advertiser thinks it's worth to put ads on the content. The streamers get paid based on subscription only. Not that they couldn't develop an advertisement pay model, but they are not experts at it. This puts the streamers in two major disadvantages:

1) Under the subscription revenue model (assuming advertising is not used or not used significantly), spending billions on College Football is not a smart business move. The way a company like Netflix makes money is by drawing and keeping subscribers. So for it to be worth it to them to buy in, there would have to be a significant number of people who would subscribe to the service who didn't before, or who would be willing to pay a higher subscription. That's a pretty high hurdle to clear. I don't think many people would subscribe to Amazon Prime for CFB who didn't subscribe already for other reasons.

2) If they do decide to go to a hybrid subscription/advertisement model, they're less experienced at it vs. the networks. It would be tough for them to outbid the networks going toe to toe on the same business model. Would one of them be willing to take a significant loss to get a major CFB deal? Maybe. But the next question is - what's in it for them? I think they would be willing to take a loss if it could open up opportunities for them. But what is the opportunity?

I think if one of the streamers picks up a CFB contract, it would be one of the Group of 5 conferences or at best the ACC. Hedge their bets and get in at a lower risk level to gain experience. Then, in the next round they might be ready to fully buy in if it makes sense based on the business environment.
The internets tells me 1.7 million out of 16 million viewers watched Thursday Night Football on Amazon.

Not sure what that says about Amazon being a player in Big 12 rights
 

JRE1975

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Not having listened to the podcast yet, I will say I think that Williams and others overestimate the role of the streaming companies in college football media rights. Not because the fans wouldn't watch on those streaming services or that the sport would lose viewers by doing it. But because it is likely not a good business decision for the streaming services.

We would be looking at companies like Amazon, Netflix, Google, and potentially Apple competing with Disney/ESPN, Fox, and CBS. In order to get the rights to college football, one or more of the streaming companies would have to bid higher than the existing competitors. There are some hurdles to get over.

The business model is different for the streamers vs. the broadcast networks. The networks make money from advertisers. They get paid based on how much an advertiser thinks it's worth to put ads on the content. The streamers get paid based on subscription only. Not that they couldn't develop an advertisement pay model, but they are not experts at it. This puts the streamers in two major disadvantages:

1) Under the subscription revenue model (assuming advertising is not used or not used significantly), spending billions on College Football is not a smart business move. The way a company like Netflix makes money is by drawing and keeping subscribers. So for it to be worth it to them to buy in, there would have to be a significant number of people who would subscribe to the service who didn't before, or who would be willing to pay a higher subscription. That's a pretty high hurdle to clear. I don't think many people would subscribe to Amazon Prime for CFB who didn't subscribe already for other reasons.

2) If they do decide to go to a hybrid subscription/advertisement model, they're less experienced at it vs. the networks. It would be tough for them to outbid the networks going toe to toe on the same business model. Would one of them be willing to take a significant loss to get a major CFB deal? Maybe. But the next question is - what's in it for them? I think they would be willing to take a loss if it could open up opportunities for them. But what is the opportunity?

I think if one of the streamers picks up a CFB contract, it would be one of the Group of 5 conferences or at best the ACC. Hedge their bets and get in at a lower risk level to gain experience. Then, in the next round they might be ready to fully buy in if it makes sense based on the business environment.
I respectfully disagree with your premise with respect to streaming service viability for college sports. Google is very good at selling advertising, in fact they are so good they are the largest in the world at $180 billion estimated for last year. Their subsidiary, You Tube TV already has a relationship with MLB, MLS, and other sports.

As You Tube, and others try and be the replacement for the cable provider, they would very much benefit from followers of the Big 12 and the PAC12 either subscribing to You Tube TV either as a sports package similar to ESPN+ at a monthly fee. By the way, have you watched a game on ESPN+, exactly the same ads you see on regular ESPN and ABC. If you watch very many You Tube videos you see GIECO and Progressive you see on ESPN.

But to say that streaming services don't already have extremely robust advertising sales groups I disagree with you. Facebook ($149 billion) comes in second to Google, both well out in front of broadcast TV.

If Google (You Tube) is going to replace your cable provider, then they need live content, just like ESPN.

My son-in-law is a director of Sales at an NBC station in a major city and he tells me over a third of their revenue now comes from streaming bundling with the broadcast content.

Times are changing and I would not be surprised at all if Google jumps into live sports even bigger than they have already.
 

cyfan4

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Not having listened to the podcast yet, I will say I think that Williams and others overestimate the role of the streaming companies in college football media rights. Not because the fans wouldn't watch on those streaming services or that the sport would lose viewers by doing it. But because it is likely not a good business decision for the streaming services.

We would be looking at companies like Amazon, Netflix, Google, and potentially Apple competing with Disney/ESPN, Fox, and CBS. In order to get the rights to college football, one or more of the streaming companies would have to bid higher than the existing competitors. There are some hurdles to get over.

The business model is different for the streamers vs. the broadcast networks. The networks make money from advertisers. They get paid based on how much an advertiser thinks it's worth to put ads on the content. The streamers get paid based on subscription only. Not that they couldn't develop an advertisement pay model, but they are not experts at it. This puts the streamers in two major disadvantages:

1) Under the subscription revenue model (assuming advertising is not used or not used significantly), spending billions on College Football is not a smart business move. The way a company like Netflix makes money is by drawing and keeping subscribers. So for it to be worth it to them to buy in, there would have to be a significant number of people who would subscribe to the service who didn't before, or who would be willing to pay a higher subscription. That's a pretty high hurdle to clear. I don't think many people would subscribe to Amazon Prime for CFB who didn't subscribe already for other reasons.

2) If they do decide to go to a hybrid subscription/advertisement model, they're less experienced at it vs. the networks. It would be tough for them to outbid the networks going toe to toe on the same business model. Would one of them be willing to take a significant loss to get a major CFB deal? Maybe. But the next question is - what's in it for them? I think they would be willing to take a loss if it could open up opportunities for them. But what is the opportunity?

I think if one of the streamers picks up a CFB contract, it would be one of the Group of 5 conferences or at best the ACC. Hedge their bets and get in at a lower risk level to gain experience. Then, in the next round they might be ready to fully buy in if it makes sense based on the business environment.
For your #1 note, you're forgetting about needing to produce more content to retain current customers. Can't just sit on the shows you have now and expect everyone to keep paying for the same content every month.
That's why Netflix and Amazon prime are spending fortunes producing their own content.
 

agrabes

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Oct 25, 2006
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I respectfully disagree with your premise with respect to streaming service viability for college sports. Google is very good at selling advertising, in fact they are so good they are the largest in the world at $180 billion estimated for last year. Their subsidiary, You Tube TV already has a relationship with MLB, MLS, and other sports.

As You Tube, and others try and be the replacement for the cable provider, they would very much benefit from followers of the Big 12 and the PAC12 either subscribing to You Tube TV either as a sports package similar to ESPN+ at a monthly fee. By the way, have you watched a game on ESPN+, exactly the same ads you see on regular ESPN and ABC. If you watch very many You Tube videos you see GIECO and Progressive you see on ESPN.

But to say that streaming services don't already have extremely robust advertising sales groups I disagree with you. Facebook ($149 billion) comes in second to Google, both well out in front of broadcast TV.

If Google (You Tube) is going to replace your cable provider, then they need live content, just like ESPN.

My son-in-law is a director of Sales at an NBC station in a major city and he tells me over a third of their revenue now comes from streaming bundling with the broadcast content.

Times are changing and I would not be surprised at all if Google jumps into live sports even bigger than they have already.
True and good points. That said though, not having any actual inside knowledge or ties to the industry, I just don't see it.

Google is the largest advertiser, but they are not in the business of selling live TV advertisements. Their biggest revenue is from placing online ads which is a massive business of course, but significantly different from ads on live TV. In Youtube, they do serve ads on videos, but again it's totally different.

Now if you look at YoutubeTV, in that case they are not involved in the advertisement portion of it. They are buying the rights to broadcast TV networks which have already done the business of advertising. So in that case they are not doing any advertisement. Basically, they are serving in the role of Mediacom.

So if you look at Google, Amazon, Facebook, etc they do have experience in the broad category of advertisement and they have the capabilities of putting out a quality video stream to people. But they don't have the experience and knowledge to understand how it works packaging in those ads as part of the video feed. It's sort of like this - when Amazon started becoming what it is today - the world's biggest online retailer, and when it started taking huge bites out of the brick and mortar stores, those stores tried to fight back. They have decades of experience selling products to consumers. They'd even had their own online stores up and running for years. But they couldn't take on Amazon. They kept losing business, because they just didn't understand that secret sauce Amazon had learned, how to make money selling big box store type items in an online environment. It took years, but Walmart seems to have caught up a bit with their online presence. But they weren't able to just step in and become a competitor right away even though you would think they should. The same applies here - these tech companies do have tons of relevant experience but they haven't done it yet themselves. I think they can get there, but they're not there yet. That's why I say this round they'll go for the smaller contracts to figure it out and then swing for the fences next time around if it works.

For your #1 note, you're forgetting about needing to produce more content to retain current customers. Can't just sit on the shows you have now and expect everyone to keep paying for the same content every month.
That's why Netflix and Amazon prime are spending fortunes producing their own content.
Yes, agreed. I'm not forgetting they have a need to produce more content to keep customers interested. But if Netflix could spend $50M to produce a season of a TV show ($50M/season for Orange is the New Black for example), or they could spend billions for P5 college football content, I think they're going to pick that TV show every time. Because they know that those TV shows keep their subscribers happy. The cost difference from tens of millions to produce TV shows vs. hundreds of millions or billions to get CFB has to be made up by a corresponding increase in subscribers or revenue from ads.
 

BCClone

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Not having listened to the podcast yet, I will say I think that Williams and others overestimate the role of the streaming companies in college football media rights. Not because the fans wouldn't watch on those streaming services or that the sport would lose viewers by doing it. But because it is likely not a good business decision for the streaming services.

We would be looking at companies like Amazon, Netflix, Google, and potentially Apple competing with Disney/ESPN, Fox, and CBS. In order to get the rights to college football, one or more of the streaming companies would have to bid higher than the existing competitors. There are some hurdles to get over.

The business model is different for the streamers vs. the broadcast networks. The networks make money from advertisers. They get paid based on how much an advertiser thinks it's worth to put ads on the content. The streamers get paid based on subscription only. Not that they couldn't develop an advertisement pay model, but they are not experts at it. This puts the streamers in two major disadvantages:

1) Under the subscription revenue model (assuming advertising is not used or not used significantly), spending billions on College Football is not a smart business move. The way a company like Netflix makes money is by drawing and keeping subscribers. So for it to be worth it to them to buy in, there would have to be a significant number of people who would subscribe to the service who didn't before, or who would be willing to pay a higher subscription. That's a pretty high hurdle to clear. I don't think many people would subscribe to Amazon Prime for CFB who didn't subscribe already for other reasons.

2) If they do decide to go to a hybrid subscription/advertisement model, they're less experienced at it vs. the networks. It would be tough for them to outbid the networks going toe to toe on the same business model. Would one of them be willing to take a significant loss to get a major CFB deal? Maybe. But the next question is - what's in it for them? I think they would be willing to take a loss if it could open up opportunities for them. But what is the opportunity?

I think if one of the streamers picks up a CFB contract, it would be one of the Group of 5 conferences or at best the ACC. Hedge their bets and get in at a lower risk level to gain experience. Then, in the next round they might be ready to fully buy in if it makes sense based on the business environment.
The people tied to a TV set are dying daily. Those watching on their phones and other portable devices are being born daily. Which group is going to win out in your opinion? I would say my kids' and younger will.
 

jereseib

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RE: postponed games

There are still 15 MBB games across the conference that aren't on the schedule.

Baylor has 6 to make up.
5 - TCU
4 - Tech and UT
3 - ISU and WVU
2 - OU and OSU
1 - KSU

It won't be possible to get them all. At most, there are 3 dates available before the tournament (March 2, March 4-5, March 7).

I could see the priority for makeups being the top half of the league -- especially if they have games left against the bottom half. Second priority might be the closest trips, to help any tight scheduling.
Baylor and Michigan sure played the Covid game well. Must be rough getting 3 weeks off in the dog days of the season so you are well rested for March.
 

agrabes

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Oct 25, 2006
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The people tied to a TV set are dying daily. Those watching on their phones and other portable devices are being born daily. Which group is going to win out in your opinion? I would say my kids' and younger will.
Agreed - but remember - watching on a smart phone vs. watching on a tv set is not the question we're asking here.

What we are asking is - will college football broadcasts be produced and sold by the major broadcasters ESPN/ABC/FOX/CBS/NBC, or will they be produced by Google, Facebook, Amazon, Netflix, or others?

Watching a game on your ESPN+ App on your phone is the way of the future. But in that case, Disney/ESPN still owns the rights and produces the content. Watching a game using your Youtube TV subscription on your phone or tablet is also the way of the future, but in that case the game is still produced by ESPN or Fox who own the rights. Google gets a cut in that case, but they're not buying the rights from the B12 or the SEC. They're buying the right to broadcast ESPN.

Another possibility is that Google buys up the rights to the Big 12. Then we're looking at a Google Sports channel broadcasting ISU vs. OU. I'm just not sure that's like at least in the near future. I think it could happen in the future, but it's probably 10-20 years off. And it's totally separate from using streaming technology to watch broadcasts being produced by the existing media giants.