BTN Not Making It

Donate To GopherHole
A

akgopher

Active member
Joined
Nov 23, 2008
Messages
1,689
Reaction score
0
Points
36
Souhan reported on the radio that he was told from someone within the BTN that it's not making it financially. He and Reusse also commented that the abundance of promos is not a good sign.
 

I've wondered about all the promos from the beginning. How is a network suppose to make money if it only advertises for itself?
 

Gophers09 said:
I've wondered about all the promos from the beginning. How is a network suppose to make money if it only advertises for itself?
Click to expand...

Remember, they get a per subscriber monthly fee from the cable and dish companies. They are hitting about 70 million homes. Even at an average of 20-cents per household (which I think is low), they would be getting about $14 million per month in subscriber revenue. Sponsorships would be an additional revenue. I have no idea how much it costs to run that place, but I bet they are doing okay. Expenses cannot be that high, can they? They are only producing games and the nightly Big Ten Tonight. It isn't like they are filling 24 hours a day with costly programming.
 

Since they are paying each school a set amount you can also count that as an expense. I thought I heard 6 or 7 million per school.$70-80 million per yr.
 

Remember that it's not just the BT and its institutions that have a stake in the BTN. Fox (aka Murdoch) has something like a 49% share in the network.

I've had the BTN basically since its inception. I understood why advertisers would shy away initially since it was basically just on dish and directtv. However, I'm very surprised in the lack of advertisers now that most major cable companies carry the BTN. It must mean that the increased reach of the network hasn't translated in a substantial increase in eyeballs.
 


I'm far from an expert on the financing of media companies, but I believe that the BTN is largely owned by the BT schools themselves. I think Fox is a partner in the venture too. That said, even if there is a seven figure per school payment, they are therefor paying it to themselves. So sort of a net-to-zero expense there. Again, not an expert, but content is supposed to be the predominant expense of a media company. If the "games" content nets to zero, and I don't see a lot of obvious talent expense applied to the proprietary chat panel shows (the talent there is really quite modest - not a jab or a complaint, just a fact). Tack on a couple of grad students with camcorders for a few of the other shows and I bet the real expense profile is so low that the network can live on fumes for quite some time.

Just my guess . . . . .
 

Pewterschmidt said:
I'm very surprised in the lack of advertisers now that most major cable companies carry the BTN. It must mean that the increased reach of the network hasn't translated in a substantial increase in eyeballs.
Click to expand...
Could be ... but then advertising in all media is reportedly down due to the general economy.
 

Odd arrangement

I was told last year by a U of M financial insider that the BTN was trying to negotiate with schools to restructure or reduce contractual payouts when they were in the battle with the cable companies. Most of the BT schools were willing to pitch in and "make it work." The one holdout was Ohio State, the wealthiest among the schools.

Clearly, this is not purely a partnership where profits are divided into agreed upon portions. Essentially, the schools don't "lose" if the network does not meet its plan. Whoever "owns" it is paying the schools, and the 51/49 ownership agreement between Fox and the schools is not an equal division of the risk.

Advertising dollars are fewer, but it may also be a sign that the sports market on TV is just plain saturated. Even for us sports fanatics, there are only so many hours you can have games on TV. It is good to go the office now and again, too.
 

>>he was told from someone within the BTN that it's not making it financially<<

I'll bet the BTN forgot to budget for Coach Keady's face paint and hair grease.
 



Holy Man said:
I was told last year by a U of M financial insider that the BTN was trying to negotiate with schools to restructure or reduce contractual payouts when they were in the battle with the cable companies. Most of the BT schools were willing to pitch in and "make it work." The one holdout was Ohio State, the wealthiest among the schools.

Clearly, this is not purely a partnership where profits are divided into agreed upon portions. Essentially, the schools don't "lose" if the network does not meet its plan. Whoever "owns" it is paying the schools, and the 51/49 ownership agreement between Fox and the schools is not an equal division of the risk.

Advertising dollars are fewer, but it may also be a sign that the sports market on TV is just plain saturated. Even for us sports fanatics, there are only so many hours you can have games on TV. It is good to go the office now and again, too.
Click to expand...

If indeed it is a 51/49 BT/Fox split, I wholeheartedly agree it's a crummy risk/reward split. BT supplies all the content (by far the most important and revenue volitile component of the business and Fox provides production and distribution, the costs of which are low and fixed. Looks like the Universities got snookered. Hard to believe, isn't it?

To the point of another poster, there is no way that BTN gets 20 cents per dish!

Still, I think this thing could run on fumes as long as the ownership has an interest in keeping it going. And if Fox's cut is outsized they can be negotiated down. Less of something > all of nothing.
 

minimax said:
To the point of another poster, there is no way that BTN gets 20 cents per dish!
Click to expand...

Well, I didn't say they were getting 20 cents per dish. I said they were averaging 20 cents per subscriber. I know that some of the cable companies are paying $1 per customer or more per month. I think the goal was to average about 30 cents per subscriber, but they likely missed that mark. 20 cents is probably about right.

And, I wouldn't say the Big Ten schools took on all the risk. The capital expenditures of starting a venture from scratch has to be huge. HD cameras, satellite trucks, satellite time, office space, distribution equipment, studios, talent acquisition, hardware, software, payroll for months prior to any revenue, etc. The TV side of it had to spring for all that startup cost.
 

I also read somewhere at one point that it's a 51/49 split for the Big Ten through a certain time, and then Fox will gain the 51/49 market share.

I personally believe the network is financially doing OK, simply based on the math, plus the fact that in time, the money going to universities, I believe, goes down at a certain point as well.
 

Hey tjgopher.

As disclosed earlier, I claim very limited knowledge of financing media companies and even less knowledge of the BTN venture structure in particular. And it sounds like you have some real practical knowledge of at least the latter. A question then - what is the difference between a dish ( my shorthand meant to include cable boxes as well but I get it via DirecTV), a household, or a subscriber? You note 70 million subscribers (I translated that to mean dishes or cable boxes). That has to be just about every cable and dish subscriber in the country as we have about 120 mm households - doesn't it? I could certainly be wrong about this, but I remain very skeptical about the 20 cents and the resulting $14mm monthly subscriber fee revenue. If it's true, then there is plenty to pay to the "U"s and still have some to spend on their lavish production quality. And that pre-ad rev as well, minimal though it may be.

Again not my business, but I'm pretty confident that the content is worth more and has more volitilty (risk) than all the overhead type stuff, most of which Fox probably provides in kind anyway.

In any event, while BTN is not the greatest, it does allow me to see more games and I'd like it to stick around. Which, I think is likely because as, I've said before it looks to me like the thing can, does and will run on fumes.
 



I think you are over-estimating quite a bit on the subscriber fees. While they do get $.50-.60 per subscriber in the footprint, they get virtually nothing for the subscribers outside the footprint. On DirecTV, it is a 'basic' channel, but I'm sure they don't pay much for those outside the area. (And if they do it doesn't matter since Fox owns 100% of DirecTV and 49% of the BTN.) For Dish and Cable, they are only included in sports packs outside the footprint. So they may be an ok amount per subscriber but only a small % of overall cable subsribers pay for the premium sports package.

All that said, while they may be struggling a bit (every tv network and local station is) I think they will make it long-term. If 'The Mountain' has made it this long, the BTN will make it too.
 

I have been told by someone that would definitely know, that the BTN is ahead of schedule and is profitable in year two.

Go Gophers!!
 

howeda7 said:
I think you are over-estimating quite a bit on the subscriber fees. While they do get $.50-.60 per subscriber in the footprint, they get virtually nothing for the subscribers outside the footprint. On DirecTV, it is a 'basic' channel, but I'm sure they don't pay much for those outside the area. (And if they do it doesn't matter since Fox owns 100% of DirecTV and 49% of the BTN.) For Dish and Cable, they are only included in sports packs outside the footprint. So they may be an ok amount per subscriber but only a small % of overall cable subsribers pay for the premium sports package.
Click to expand...

I know for sure there are some companies within the footprint that are paying $1 or more per subscriber per month. Outside the footprint some are paying ten-cents. As, I said, I think the general goal was to average 30-cents per subscriber but I doubt they hit that.

Comcast, for example, is paying 70-cents per subscriber within the footprint. They have 9 million subscribers within the footprint. That means Comcast sends the BTN a monthly check for roughly $6.3 million. That is only Comcast and that only is for their subscribers within the footprint. The check is bigger, as Comcast has customers outside the footprint paying less, but still paying something nonetheless.

Time Warner has 2.5 million customers within the footprint and their deal is said to be similar. That's another $1.75 million monthly check, not counting the additional subscriber fees from outside the footprint.

Add in Mediacom and Charter who are also giants in the footprint, along with Dish and DirectTV, and the other 235 cable companies they have deals with and you can see the BTN is cashing some decent checks.

Oh yeah, then add in the actual advertising revenue. Rotel alone must be paying millions:)

http://sports.espn.go.com/ncf/news/story?id=3452631

http://www.cleveland.com/osu/index.ssf/2008/08/big_ten_network_time_warner_re.html
 

You must log in or register to reply here.



Top Bottom