Conference Realignment

[slugboy]

Espn is losing money, do you think anyone is watching those trash ACC games between BC and WF etc? What kind of ad revenue do you think they can get from those games? Alien-Tape and Winn-Dixie ads don’t cut it…

Why do you think they’re losing money?

They’re making about three billion dollars in profit on revenues of about sixteen billion dollars.

They’re pinching pennies because they aren’t growing at the same rate they used to be, but they’re healthily profitable.

ESPN shows strength as Disney's other networks report lower revenue

ESPN's operating income and revenue should come as a giant relief to investors.

www.cnbc.com

Disney unveils Q1 financials, ESPN streaming service to debut by late 2025 - Sportcal

Disney’s sports revenues (mostly coming through ESPN) amounted to $4.83 billion, up year-on-year by 4%.

www.sportcal.com

 

[Vespid]

They made $140 million last year from the ACCN. 46 million viewers.

C'mon man, don't confuse the issue with facts. To put a finer point on it, isn't that 140m just what they gave us, our "cut"? COGS? Who knows what they actually made specifically from ACCN as a line item From the annual report, guessing it was pretty healthy.

 

[gtbeak]

C'mon man, don't confuse the issue with facts. To put a finer point on it, isn't that 140m just what they gave us, our "cut"? COGS? Who knows what they actually made specifically from ACCN as a line item From the annual report, guessing it was pretty healthy.

My understanding is that profits are split 50/50. If they distributed $140M to the ACC, then their profits were about $280M. And that is before adding the higher carriage fees for California and Texas.

 

[Richard7125]

There is only so much that advertisers will pay, and my bet is that sEcSPN nearing the top of that range. I just cannot see how much more can be squeezed out of the cow, but they always seem to find a way (and this is why I think their fingers are all over this "expansion"). However, if we slip into a recession of any severity, and advertising budgets are cut, we may see them start to squeal. They are way out there in their financial commitments. If that happens, I can see them letting the ACC go in 2026 and focusing their assets on sustaining the SECheat. I'm confident that is not their plan going forward as they have too much sunk costs in the ACC model, but if push comes to shove don't anyone tell me they would sacrifice the SECheat for the ACC. Ain't happening.

If i were ESPN, i would be nervous about Amazon. If Amazon decides they want to get into college football it will be a lot easier for them to poach the SEC from ESPN that it would be to get the Big10 from Fox/CBS/NBC. I also think more and more games will start transitioning to streaming. Maybe it's an uplift to Prime or maybe Amazon experiments with pay per view. I'm actually optimistic about the ACC. It's good content, but it's not the Hope Diamond either.

 

[RonJohn]

If i were ESPN, i would be nervous about Amazon. If Amazon decides they want to get into college football it will be a lot easier for them to poach the SEC from ESPN that it would be to get the Big10 from Fox/CBS/NBC. I also think more and more games will start transitioning to streaming. Maybe it's an uplift to Prime or maybe Amazon experiments with pay per view. I'm actually optimistic about the ACC. It's good content, but it's not the Hope Diamond either.

The ESPN contract with the SEC does not expire until 2034. The Fox/CBS/NBC contract with the Big 10 doesn't expire until 2030(I think). The streaming services have been cutting back on money spent for streaming. I don't think ESPN is concerned about anyone "poaching" the SEC away from them.

You might see some games start transitioning to streaming, but it isn't the cash cow that everyone thought it would be a few years ago. Actually up to this point, the only games that have been streaming only are lesser games that ESPN didn't want at all, such as SC State at GT last year. I don't think that game would have even been streamed at all, except that the contract for the ACCN required all of the ACC schools to have their own broadcast facilities. ESPN didn't have to provide anything for that game. I believe that GT did all of the production and just sent it to the ACCN headquarters. GT having the facilities, and it being streaming only meant that it was hands off for (and no money required) to/from ESPN. No capitol, and no risk. Free revenue.

 

[iceeater1969]

If i were ESPN, i would be nervous about Amazon. If Amazon decides they want to get into college football it will be a lot easier for them to poach the SEC from ESPN that it would be to get the Big10 from Fox/CBS/NBC. I also think more and more games will start transitioning to streaming. Maybe it's an uplift to Prime or maybe Amazon experiments with pay per view. I'm actually optimistic about the ACC. It's good content, but it's not the Hope Diamond either.

As an old guy, I just cut the cable, bought a fancy tv. - got youtube tv w all the sports streaming.

But its all about what advertisers will pay.

So much discussion about legalities , gor, commissioner extended in improper, redacted.
Preseason preditions,are FSU and Clemson to be 1 and 2.

A. Lets say they run the table tovhave rematch in acc champ. Lets add that the crummy ( but very good academic) teams get boat raced. What would advertisers be telling espn about value of acc games without fsu and clemson ?

B. So , for fun lets,assume that one team thats good academically and now predicted to be 9th , has a great season and starts with a win over fsu. For grins assume clemson does run the table, but fsu continues to stumble. That upstart engr school could make it to acc championship and be the darling of advertisers.

The death of acc is A.
ACC gets new interest and lives is B.

 

[RonJohn]

As an old guy, I just cut the cable, bought a fancy tv. - got youtube tv w all the sports streaming.

But its all about what advertisers will pay.

YouTube TV, DIRECTV STREAM, Hulu TV, etc are cable companies that use a different method of distribution. They are not what was heralded as "streaming" a decade ago. I didn't consider changing to one of those services as "cutting the cord". All of those negotiate with ESPN for the carriage of ESPN, ACCN, and SECN. Disney still makes a LOT more money on the carriage fees than they do from advertisement. People thought 10 years ago that ESPN would be completely direct streaming by now, or be it it business. It hasn't happened yet, and actual direct streaming isn't closer to taking over from linear TV than it was 10 years ago.

 

[stinger78]

YouTube TV, DIRECTV STREAM, Hulu TV, etc are cable companies that use a different method of distribution. They are not what was heralded as "streaming" a decade ago. I didn't consider changing to one of those services as "cutting the cord". All of those negotiate with ESPN for the carriage of ESPN, ACCN, and SECN. Disney still makes a LOT more money on the carriage fees than they do from advertisement. People thought 10 years ago that ESPN would be completely direct streaming by now, or be it it business. It hasn't happened yet, and actual direct streaming isn't closer to taking over from linear TV than it was 10 years ago.

Cable companies? Direct TV is a satellite company that contracted with ATT to stream over their fiber internet service. I just switched two months ago so I could watch the Braves (and they proceeded to stink).

 

[MountainBuzzMan]

They made $140 million last year from the ACCN. 46 million viewers.

Stop with all the facts. I want to emotionally say ESPN is losing money on the ACC!!! We are doomed and the whole conference sucks and cant hold a candle to the SEC. It does not matter that the ACC, in fact beat the SEC on the field with a winning record over them last year.

ESPN must be losing money on the ACC because we suck so bad

 

[RonJohn]

Cable companies? Direct TV is a satellite company that contracted with ATT to stream over their fiber internet service. I just switched two months ago so I could watch the Braves (and they proceeded to stink).

Same business model. Same or at least very similar channel packaging. Dish Network and DirecTV are satellite companies, but they operate the same as cable companies. DirecTV stream, YouTube TV, etc all use the same business model as cable and satellite companies. There are differences in how they allow people to stop and restart service much more easily than cable/Sat companies, but they are basically the same. Linear TV is linear TV. In my opinion, "cutting the cord" is only when you don't subscribe to any linear TV provider.

 

[WreckinGT]

Why do you think they’re losing money?

They’re making about three billion dollars in profit on revenues of about sixteen billion dollars.

They’re pinching pennies because they aren’t growing at the same rate they used to be, but they’re healthily profitable.

ESPN shows strength as Disney's other networks report lower revenue

ESPN's operating income and revenue should come as a giant relief to investors.

www.cnbc.com

Disney unveils Q1 financials, ESPN streaming service to debut by late 2025 - Sportcal

Disney’s sports revenues (mostly coming through ESPN) amounted to $4.83 billion, up year-on-year by 4%.

www.sportcal.com

Its hard to accurately piece together ESPNs performance as Disney only gives tidbits here and there, but from reports that they have given about ESPN:

Oct 2023: Disney reported that ESPN profits were down 20% for the first 9 months of the year and that they were looking for outside investors.
Nov 2023: Disney reported ESPN operating income up 16%
Feb 2024: Disney reported sports revenue up 4% YOY but also sustained a loss of 167 million dollars.
May 2024: Disney reported ESPN revenue was up 3% but operating income was down 9%. ESPN+ had a loss of 65 million dollars and lost subscribers.

All in all they aren't losing money on the sports business but im not sure anyone would classify it as healthy either. They have lost about 20% of their TV subscribers since since 2013 and that number will continue to drop. They have offset that with advertising increases but that can only take them so far. They plan to launch their stand alone streaming service late this year or early next year. How well that does will likely impact many things.

 

[Richard7125]

Same business model. Same or at least very similar channel packaging. Dish Network and DirecTV are satellite companies, but they operate the same as cable companies. DirecTV stream, YouTube TV, etc all use the same business model as cable and satellite companies. There are differences in how they allow people to stop and restart service much more easily than cable/Sat companies, but they are basically the same. Linear TV is linear TV. In my opinion, "cutting the cord" is only when you don't subscribe to any linear TV provider.

Same business model, but a very different delivery method. 5 years ago people were afraid of consuming a "streaming" service; they aren't so much anymore. That's a significant change.

Secondly, and more importantly, most markets only had a couple of choices for cable/satellite. The "streaming services" have increased the competition in every market helping with prices to the consumers.

Lastly, the ability to change from service to service on a monthly basis further helps the consumers.

The cable/satellite companies didn't have these pressures 5+ years ago and all of this has a ripple affect back to the content providers.

 

[GTJake]

As an old guy, I just cut the cable, bought a fancy tv. - got youtube tv w all the sports streaming.

But its all about what advertisers will pay.

So much discussion about legalities , gor, commissioner extended in improper, redacted.
Preseason preditions,are FSU and Clemson to be 1 and 2.

A. Lets say they run the table tovhave rematch in acc champ. Lets add that the crummy ( but very good academic) teams get boat raced. What would advertisers be telling espn about value of acc games without fsu and clemson ?

B. So , for fun lets,assume that one team thats good academically and now predicted to be 9th , has a great season and starts with a win over fsu. For grins assume clemson does run the table, but fsu continues to stumble. That upstart engr school could make it to acc championship and be the darling of advertisers.

The death of acc is A.
ACC gets new interest and lives is B.

College Football has always been (to an extent) cyclical, Alabama's run has been consistent for awhile and the top 20 teams or so are predictable. But, why would ESPN put all their eggs in fewer baskets ? Like you were pointing out, VT, GT, Miami, BC, UVA haven't done much lately but that will eventually change.

The SEC not so long ago was all about Alabama and UGAG, Florida, Tennessee, Auburn, the Mississippi's. Tennessee, Ole Miss are back and Auburn and Florida are recruiting well so it looks like they are cycling up.

IMO, ESPN keeping the ACC around is good for business ...

 

[stinger78]

In an abstract sense, any business entity that makes money is good. However, if the resources needed to generate that profit could be used elsewhere to generate greater profit, then they are misplaced. A company often has to sacrifice the good for the better and the better for the best. None of us knows the details of sEcSPN's business model, what they are planning, where the opportunities are, and what the opportunity costs might be.

Not knowing these, we ask: Which of their college athletics "properties" seems to have the most upside, SECheat football or ACC football? I think most would instinctively chooses SECheat. I would. If so, in what configuration is that greater upside found, the current model, a premier league model, or some other? How does sEcSPN see that happening? That is the great unknown at this point.

This we know: every move being made now in college athletics is about money, not the S-A. The above seems to represent a disruptive innovation in college sports, and while there can be great benefit there is also great risk in that - not only for the sport itself, but for the money associated with it. Not only is sEcSPN's bottom line at risk, but so are the bottom-lines of about half of division 1 college football. They walk the line together. As long as major college football is tied to sEcSPN it is at risk. We all sense this.

If the great upside (referenced above) is most significantly found in the SECheat, and that is how the risk is mitigated in their plan, then they will move to protect that athletic property above all. No one sees the current ACC or B12 as a hedge against the risk in jumping to a disruptive S-curve. The current SECheat absolutely is.

I have come to see the moves of TAMU, Missouri, Texas, and Oklahoma not only as a profit generator in the near term, but also as a hedge against the risk of major disruptive change in the long term. It's all calculated and it's all quite complex. None of us knows the whole answer. Be sure, however, what we have now is a transitory state. The future may not yet be written but it is most certainly under discussion.

 

[Vespidae]

Its hard to accurately piece together ESPNs performance as Disney only gives tidbits here and there, but from reports that they have given about ESPN:

Oct 2023: Disney reported that ESPN profits were down 20% for the first 9 months of the year and that they were looking for outside investors.
Nov 2023: Disney reported ESPN operating income up 16%
Feb 2024: Disney reported sports revenue up 4% YOY but also sustained a loss of 167 million dollars.
May 2024: Disney reported ESPN revenue was up 3% but operating income was down 9%. ESPN+ had a loss of 65 million dollars and lost subscribers.

All in all they aren't losing money on the sports business but im not sure anyone would classify it as healthy either. They have lost about 20% of their TV subscribers since since 2013 and that number will continue to drop. They have offset that with advertising increases but that can only take them so far. They plan to launch their stand alone streaming service late this year or early next year. How well that does will likely impact many things.

ESPN made $2.4 billion on $17 billion in revenue. It has many moving parts including ESPN International Star (India) … both of whom declined offset by stronger domestic ESPN. ESPN maintained ad revenue despite its battle Comcast.

There are many programming units that ESPN may want partners for (e.g., cricket) but ESPN appears to be doing well.

Net net, ESPN is massive and can’t be discussed as simply as linear to streaming.

 

[cpf2001]

ESPN’s long term problem is going to be picking up subscribers through any distribution method over the next 15-20 years from kids increasingly growing up on free stuff on their own schedule on TikTok, YouTube, and video games.

We’ve gone from cable/satellite as a default, to linear tv being only for sports or fans of certain other types of content among millennials, to probably an even bigger future drop. Are enough kids gonna even want to watch college sports and the other long-tail ESPN sports at all?

IMO right now is similar to 2010-2012. The writing was on the wall for linear tv for shows and movies, but viewership was still hitting all time highs, and then the change had enough momentum to hit like a hammer over the next decade.

 

[orientalnc]

ESPN’s long term problem is going to be picking up subscribers through any distribution method over the next 15-20 years from kids increasingly growing up on free stuff on their own schedule on TikTok, YouTube, and video games.

We’ve gone from cable/satellite as a default, to linear tv being only for sports or fans of certain other types of content among millennials, to probably an even bigger future drop. Are enough kids gonna even want to watch college sports and the other long-tail ESPN sports at all?

IMO right now is similar to 2010-2012. The writing was on the wall for linear tv for shows and movies, but viewership was still hitting all time highs, and then the change had enough momentum to hit like a hammer over the next decade.

While you raise some interesting points, I think you forget that TV distribution is a bundled model no matter where you look. Maybe ESPN+ will change that, but the details of that plan are not yet available,. If ESPN drops ACC sports in the Carolinas and Virginia, they (via the carriers) will lose a lot of subs. Maybe me. If they transfer a bunch of ACC games to the ESPN+, maybe the same will happen. We, as a culture are edging up on the limit we will pay for entertainment (including sports). My dad, on a postman's salary, took my brother & I to Atlanta minor league baseball games before the Braves. We probably saw 5-6 games every year. In real terms it is more expensive to subscribe to YouTube TV and pay your internet provider than it cost my dad to take his sons to baseball games. I paid over $100 each for my wife & I see Rhiannon Giddens in Edgartown, MV last weekend. Dinner ran us close to $200 with wine. Thankfully, we stayed with friends. Still, that's a lot like going to a college football game.

The point of this? The contracts for these conference media deals may have peaked. In ten years we may see our ESPN contract in a much different light.

 

[cpf2001]

While you raise some interesting points, I think you forget that TV distribution is a bundled model no matter where you look. Maybe ESPN+ will change that, but the details of that plan are not yet available,. If ESPN drops ACC sports in the Carolinas and Virginia, they (via the carriers) will lose a lot of subs. Maybe me. If they transfer a bunch of ACC games to the ESPN+, maybe the same will happen. We, as a culture are edging up on the limit we will pay for entertainment (including sports). My dad, on a postman's salary, took my brother & I to Atlanta minor league baseball games before the Braves. We probably saw 5-6 games every year. In real terms it is more expensive to subscribe to YouTube TV and pay your internet provider than it cost my dad to take his sons to baseball games. I paid over $100 each for my wife & I see Rhiannon Giddens in Edgartown, MV last weekend. Dinner ran us close to $200 with wine. Thankfully, we stayed with friends. Still, that's a lot like going to a college football game.

The point of this? The contracts for these conference media deals may have peaked. In ten years we may see our ESPN contract in a much different light.

I think the way the bundling plays out is going to be very interesting.

I think some level of bundling will stick around too - even Netflix/hulu/etc are bundles of a sort, you aren’t paying by the show. That’s probably too small a level - nobody wants to juggle four+ subscriptions. But $100 bundles are increasingly hard to justify.

The biggest interesting question about a standalone sports streaming service, IMO, is if it makes it harder to win new fans. We’ll be paying to watch GT games regardless, but if you’re a new grad from somewhere that doesn’t do high level sports who just moved to Atlanta, you probably aren’t in the market for a sports subscription at all. You get Netflix, maybe you have Amazon, maybe that’s it. How do you get into the Braves or GT or the Hawks or anyone?

In 2009 that new grad would almost certainly get cable and so those sports games would be available at no added cost if, say, they went to a game with friends and wanted to follow along at home after. Now it’s a big extra commitment. Does that shrink the long-term market?

 

[stinger78]

I think the way the bundling plays out is going to be very interesting.

I think some level of bundling will stick around too - even Netflix/hulu/etc are bundles of a sort, you aren’t paying by the show. That’s probably too small a level - nobody wants to juggle four+ subscriptions. But $100 bundles are increasingly hard to justify.

The biggest interesting question about a standalone sports streaming service, IMO, is if it makes it harder to win new fans. We’ll be paying to watch GT games regardless, but if you’re a new grad from somewhere that doesn’t do high level sports who just moved to Atlanta, you probably aren’t in the market for a sports subscription at all. You get Netflix, maybe you have Amazon, maybe that’s it. How do you get into the Braves or GT or the Hawks or anyone?

In 2009 that new grad would almost certainly get cable and so those sports games would be available at no added cost if, say, they went to a game with friends and wanted to follow along at home after. Now it’s a big extra commitment. Does that shrink the long-term market?

Yes.

 

[Vespidae]

Does that shrink the long-term market?

No. The potential market remains the same or even growing with population. There are two issues … content and distribution. ESPN owns content but its distribution is at risk. So currently, it’s addressing that by higher carriage fees and higher advertising.

But distribution is distribution to who? Hardcore streamers who enjoy sports will likely pay for a “Saturday Ticket”. But as you said, there a passive users that have to be replaced. Disney already owns Hulu, so that’s a bundling option. I think it would be far easier for Disney to acquire a phone network (e.g., PureTalk, or partner) and and bundle “free ESPN” into the package. AT&T already does this with HBO.

I think the position of the death of ESPN is greatly exaggerated. They simply have to find a new distribution model to replace the carriage fee model. It’s likely going to involve multiple channels, probably dozens. But their content is desirable so … we will see how it evolves.