The Athletic: The future of Power 5 TV contracts: The next windfall is only a few years away

[BleedGopher]

per Mandel:


“The cavalry is coming.”

That’s the message Navigate Research CEO A.J. Maestas would like to convey to major college athletic departments currently staring down the dual abyss of a global pandemic and deep-cutting recession. Though all signs point to an on-time 2020 football season, schools may lose tens of millions of dollars in ticket sales due to empty or reduced-capacity stadiums. And there is no certainty things will be back to “normal” by fall 2021.

But as long as there are football games being televised, big paychecks from the likes of ESPN, FOX and CBS are going to keep pouring in. Annual TV revenue flowing to the Power 5 conferences has skyrocketed by more than 300 percent over the past decade.

But the truly good news for at least four of the Power 5 conferences, if they can just weather the storm: Another huge spike is headed their way on the other side of this crisis. That’s because, over a three-year span beginning in 2023, the Big Ten, Pac-12, SEC, Big 12 and College Football Playoff all have TV rights deals coming up for negotiation.

“If you have a longer vision on the future of collegiate athletics and what the revenue model will look like,” said Maestas, “then you would see COVID as a blip on the long-term radar, as opposed to a catastrophic long-term change.”

Historically, new TV contracts have generated huge increases in the first year of a new deal. Despite the current economic downturn, analysts believe the demand for those rights will be just as flush as ever. Case in point: On Saturday, the New York Post reported that Turner and Major League Baseball agreed to extend their postseason deal, which expires in 2021, with an increase from $350 million a year to “the $500 million per year range,” a roughly 40 percent bump over the length of the deal.

“I don’t think that the current short-term issues, whether it’s pandemic-related or recession-related, are going to be substantive contributing factors,” said Chris Bevilacqua, a prominent TV sports consultant who’s worked with several major conferences. “These (sports rights) are all long-term deals. They’re all very valuable rights — especially college football.”

The future of Power 5 TV contracts: The next windfall is only a few years away

College sports are rife with uncertainty and cuts brought on by the pandemic, but their value as television properties is unwavering.

theathletic.com

Go Gophers!!

 

[MplsGopher]

If the P5 and CFP were smart, they’d all throw-in together and get a package for first tier rights closer to that of the NFL. Somewhere like $50-75M per school just from the main football TV contract? Don’t know if that is possible, but Big Ten and SEC are giving $50M per school with everything, the bulk of which I believe is from the main TV contracts (main conf + CFP). (The other main revenue sources are conference networks and March Madness.)

And would still allow them to put “lesser” home games for major sports and all home contests for other sports on their own conferences networks.

 

[short ornery norwegian]

Not an Athletic subscriber, so I can't read the attached article.

My big question - what is the impact of the move away from traditional cable TV to streaming video?
Sooner or later, the age of wired cable TV will end, and everyone will watch TV through satellite or streaming video.

From what I can tell, streaming video rates are quite a bit less than traditional cable TV. I'm currently paying about $90 a month for a traditional expanded basic cable package. My provider is talking about dropping cable and offering a streaming service, which would have a price tag of about $55.

so how does that impact the revenue streams for the TV networks, which will in turn determine what they are willing to pay for rights to carry sporting events?

I have a hard time believing that the TV money is going to keep going up. there is a point where the networks say "no more." I just don't know where that point is.

 

[MplsGopher]

Not an Athletic subscriber, so I can't read the attached article.

My big question - what is the impact of the move away from traditional cable TV to streaming video?
Sooner or later, the age of wired cable TV will end, and everyone will watch TV through satellite or streaming video.

From what I can tell, streaming video rates are quite a bit less than traditional cable TV. I'm currently paying about $90 a month for a traditional expanded basic cable package. My provider is talking about dropping cable and offering a streaming service, which would have a price tag of about $55.

so how does that impact the revenue streams for the TV networks, which will in turn determine what they are willing to pay for rights to carry sporting events?

I have a hard time believing that the TV money is going to keep going up. there is a point where the networks say "no more." I just don't know where that point is.

For me, I won't watch live TV anymore, because of the commercials. Netflix, Hulu, HBO, etc. without commercials is too good, too much content.

Except: the news, and live sports. Those two things, and basically it's just the latter for most of the value, is (going to be) the only thing keeping live TV afloat.

So I disagree the TV money won't significantly increase, again, in the next big go around.


The more interesting question to me, is will we see any more major conference realignment, from TV money deals?

Any PAC schools willing to go Indy or join the Big XII? Or any Big XII schools willing to go Indy or join another P5 conf?

The main jewels are Texas and Oklahoma, maybe USC if they're willing to leave the PAC.

 

[howeda7]

Not an Athletic subscriber, so I can't read the attached article.

My big question - what is the impact of the move away from traditional cable TV to streaming video?
Sooner or later, the age of wired cable TV will end, and everyone will watch TV through satellite or streaming video.

From what I can tell, streaming video rates are quite a bit less than traditional cable TV. I'm currently paying about $90 a month for a traditional expanded basic cable package. My provider is talking about dropping cable and offering a streaming service, which would have a price tag of about $55.

so how does that impact the revenue streams for the TV networks, which will in turn determine what they are willing to pay for rights to carry sporting events?

I have a hard time believing that the TV money is going to keep going up. there is a point where the networks say "no more." I just don't know where that point is.

On streaming/cable, I think the impact is mostly baked in at this point. You will see mergers between companies. Say Comcast/YouTube for example. DirecTV/AT&T are already merged. Eventually the prices of the streaming will rise and be ~ the same as cable/satellite. The only thing that will have really changed is which pipe it comes into your house on.

 

[MplsGopher]

On streaming/cable, I think the impact is mostly baked in at this point. You will see mergers between companies. Say Comcast/YouTube for example. DirecTV/AT&T are already merged. Eventually the prices of the streaming will rise and be ~ the same as cable/satellite. The only thing that will have really changed is which pipe it comes into your house on.

With YouTubeTV and Hulu Live now going to $65/mo with 100+ channels in the package, it basically is the same thing as cable was maybe 10-15 years ago.

I figured this would happen. It's not like people haven't thought of offering smaller, cheaper channel packages. Simply: you make more money by forcing consumers to buy larger packages. Simple as that. Cable companies figured that out years ago, and streaming is just going right back to that.

The cost savings, in a sense, is that YouTubeTV/Hulu Live don't have to maintain any physical residential network at all, don't have to have cable box operations, don't have to have (or sub-contract out) operations for installers, etc.

It's all just ISP service now.

 

[mnsportsgeek]

Not an Athletic subscriber, so I can't read the attached article.

My big question - what is the impact of the move away from traditional cable TV to streaming video?
Sooner or later, the age of wired cable TV will end, and everyone will watch TV through satellite or streaming video.

From what I can tell, streaming video rates are quite a bit less than traditional cable TV. I'm currently paying about $90 a month for a traditional expanded basic cable package. My provider is talking about dropping cable and offering a streaming service, which would have a price tag of about $55.

so how does that impact the revenue streams for the TV networks, which will in turn determine what they are willing to pay for rights to carry sporting events?

I have a hard time believing that the TV money is going to keep going up. there is a point where the networks say "no more." I just don't know where that point is.

IMO, streaming cable isn’t even a blip on the radar right now. The number one service is Hulu Live and they only have like 3 million subscribers

The concern for cable companies is people dropping live TV altogether because the vast majority of people who drop cable are not replacing it with a streaming equivalent.

Couple that with the insane price increases and cable doesn’t sound so bad anymore. For example, YouTube TV has practically doubled their price in 2 years. If I were to cancel cable and get YTTV I would be spending more money. I frankly wouldn’t be surprised to see some more exits from the market like PlayStation Vue.

What I think you’ll see is cable companies transition their delivery to also be over the internet in the next 5-10 years like what you pointed out. We’re already seeing the transition with DirecTV.

I agree with you that I am concerned that TV contracts will be going down and not up. The cost of sports is what drives cable tv prices. The networks and cable companies are not blind to the fact that those numbers are dwindling. Eventually the TV industry will have to adapt or it will collapse. Though I don’t think this will happen soon as recent TV contracts are still seeing crazy increases.

 

[MplsGopher]

If Hulu Live and YouTube TV have 3M subscribers, they are very much on the radar.

That would put them right in the conversation for the top pay TV companies, outside the big 4:

https://en.wikipedia.org/wiki/List_of_multiple-system_operators

Rank	MSO name	Brand	Total subscribers	Technology
1	Comcast	Xfinity	19,900,000[2]	Cable
2	AT&T	AT&T TV, DirecTV	19,360,000[2]	VDSL/Satellite
3	Charter Communications	Spectrum	15,550,000[2]	Cable
4	Dish Network	Dish and Sling TV	11,320,000[2]	Satellite
5	Cox Communications	Contour	4,132,000[3]	Cable
6	Verizon	Fios	4,070,000[2]	Fiber
7	Altice USA	Optimum, Suddenlink, Altice Business[2]	3,140,000[2]	Cable
8	Frontier Communications	Frontier FiOS and Vantage TV	961,000[4]	Fiber
9	Mediacom	Xtream[5]	829,000[6]	Cable
10	Cable One	Sparklight[7]	818,330 [8]	Cable

 

[MplsGopher]

Also, this country's laws are rigged to prevent municipalities from starting up and providing ISP as a utility.

That is the ultimate doomsday scenario for cable companies, who are still locked into exclusive contracts with many cities, and still are the main ISP providers in the country.


The situation is so pathetic, that it actually makes financial sense for independent companies to start building-out new, private fiber optic networks in cities. An example of this is USI Internet here in Minneapolis. 300Mbit service for $50/mo. Suck it Comcast. Suck it down.

 

[hungan1]

Long time Comcast cable subscriber here. The boss of the house want to keep Cable.

If it was up to me, I'd flip to another provider/service.

The day of reckoning for cable TV bundling junk channels and letting you foot the bills for their added advertisement revenues thru those junk channels is coming.

They have the packages structured so that in order for your household to get everything they want, they have to pay extra with all those junk that comes with it.

I want my BTN fix and all the other sports channels.

 

[mnsportsgeek]

If Hulu Live and YouTube TV have 3M subscribers, they are very much on the radar.

That would put them right in the conversation for the top pay TV companies, outside the big 4:

https://en.wikipedia.org/wiki/List_of_multiple-system_operators

Rank	MSO name	Brand	Total subscribers	Technology
1	Comcast	Xfinity	19,900,000[2]	Cable
2	AT&T	AT&T TV, DirecTV	19,360,000[2]	VDSL/Satellite
3	Charter Communications	Spectrum	15,550,000[2]	Cable
4	Dish Network	Dish and Sling TV	11,320,000[2]	Satellite
5	Cox Communications	Contour	4,132,000[3]	Cable
6	Verizon	Fios	4,070,000[2]	Fiber
7	Altice USA	Optimum, Suddenlink, Altice Business[2]	3,140,000[2]	Cable
8	Frontier Communications	Frontier FiOS and Vantage TV	961,000[4]	Fiber
9	Mediacom	Xtream[5]	829,000[6]	Cable
10	Cable One	Sparklight[7]	818,330 [8]	Cable

I meant more in the sense of traditional cable vs streaming providers. Traditional cable is like 80 million households (or in that ballpark) and the streaming providers are around 10 and likely still struggling for profitability since they’re increasing prices like crazy.

I don’t really like to compare regional providers directly with national providers. I like to look at the whole pie. Even so, they’re negotiating the same cable deals so sports networks don’t really consider them anything separate from traditional cable.

 

[MplsGopher]

Long time Comcast cable subscriber here. The boss of the house want to keep Cable.

If it was up to me, I'd flip to another provider/service.

The day of reckoning for cable TV bundling junk channels and letting you foot the bills for their added advertisement revenues thru those junk channels is coming.

They have the packages structured so that in order for your household to get everything they want, they have to pay extra with all those junk that comes with it.

I want my BTN fix and all the other sports channels.

I'd like to think you are right. But the evidence right now doesn't seem to be supporting it.

Even the original, Sling is up to $30/mo, up from the original $20/mo, and with more channels.

The tried and true method is leaking into the streaming bundle providers: force your customers to pay you more per month, for more channels, and your profitability goes up.


Consumers have always pined for ala cart or at least skinny bundles. Providers have always rejected providing that to them. Not enough money in it.

 

[MplsGopher]

I meant more in the sense of traditional cable vs streaming providers. Traditional cable is like 80 million households (or in that ballpark) and the streaming providers are around 10 and likely still struggling for profitability since they’re increasing prices like crazy.

I don’t really like to compare regional providers directly with national providers. I like to look at the whole pie.

Cable can't be compared to streaming providers, because as I said in the other post, cable companies are still largely the main ISP's for the country.

 

[Word]

The situation is so pathetic, that it actually makes financial sense for independent companies to start building-out new, private fiber optic networks in cities. An example of this is USI Internet here in Minneapolis. 300Mbit service for $50/mo. Suck it Comcast. Suck it down.

USI can probably get away with that in Minneapolis due to the density - cheaper to run the cable. I would assume cost goes up significantly in the suburbs and rural areas.

I don't think I'll ever give up cable until someone can replicate the interface. We have smart TVs and Netflix (free because we have T-mobile) - not a fan of how you have to search around for stuff. I use the Roku remote on my garage TV so I don't have to have a cable box out there. The Comcast remote is so much easier. Plus for us, to have the speed of internet we have, once we would add in all the channels via streaming services we wouldn't be saving much money.

 

[hungan1]

@#$^@! They got us corralled.

I hate to admit that the Mrs. is right. She'd put up with the junk offerings to always get what she wants with ease of use. Stop complaining and enjoy your sport channels she says.