Conference Realignment

[slugboy]

Ch

Two good articles on issues with the future of ESPN and cable in general.
Cable TV companies are starting to understand that the cable TV business isn't really that profitable for them and are starting to make long term strategic decisions based on the idea that they should play to their strengths (which includes potentially exiting the video business all together).
Interesting that with its current impasse with Disney that Charter is simply encouraging its customers to get subscriptions to FUBO or YouTube TV and making it easy for them to do so. Basically Charter just wants to make sure to keep the broadband relationship.

SBJ Media: Why this weekend is so important to Disney, Charter

www.sportsbusinessjournal.com

"Regardless of what a possible deal looks like, the die is cast. Charter has shown the stomach for dropping these channels is stronger than ever. The rate that Charter pays for TV networks -- especially sports -- has become so expensive that the cable operator’s margins are razor thin. Broadband and wireless are a much better business, with much higher margins, for cable operators."

"What’s the worst-case scenario?

If Charter gets out of the video business, and if other cable operators follow suit, media rights could be reset lower, which would have broad implications on team values and player salaries. Leagues and teams still would have media rights deals. But they wouldn’t be the same as they’ve seen over the past three decades, when the cable model benefitted sports leagues and teams more than anything else."

The Rise and Fall of ESPN’s Leverage

Charting ESPN’s rise, including how it build leverage over the cable TV providers, and its ongoing decline, caused by the Internet.

stratechery.com

Charter’s 12 month net income in June was 4.65 Billion dollars. I don’t think that’s razor thin.

It’s down 15%. I agree that they’re losing their appetite for the content part of the market.

 

[RamblinRed]

An interesting note out of Dallas this weekend.
While SMU has agreed to give up Tier 1 media payouts for 9 years, its expectation is that the revenue it will receive from the other revenue pieces (Tier 2-3, NCAAT units, playoff revenue distribution, etc.) will allow it to make at least as much, if not more, than it currently makes in the AAC.

It makes their calculation make alot more sense. Yes we are getting similar to what we get today, but at least we are in a P4 conference now and set up much better for the future.

Even makes more sense for Stanford/Cal.
They are giving up roughly $16M per year (assuming ACC tier 1 share right now is approx $24M), but that would still mean they are getting everything else - which could amount to over $20M per year.



Obviously it is alot less than their payout from the PAC - Which I believe was about $37M last year, but likely more than they would have gotten if they had to join the Mountain West or had to try to rebuild a new PAC.

There was also a new Ross Dellinger article talking about how the ACC expansion came about. From that article is sounds like the additional revenue from the new members coming in at discount rates is going to be split close to 50/50 between equal payouts to all current members and money going into a performance based pot.

 

[Papa Foxtrot]

"What’s the worst-case scenario?

If Charter gets out of the video business, and if other cable operators follow suit, media rights could be reset lower, which would have broad implications on team values and player salaries. Leagues and teams still would have media rights deals. But they wouldn’t be the same as they’ve seen over the past three decades, when the cable model benefitted sports leagues and teams more than anything else."

It appears to me that the value of broadcast rights has already peaked. The next few years are going to be very interesting for ESPN. They(and their parent co.) know that the current business model is dying, but they can't seem to get a handle on the future. DIS itself is a massive dumpster fire, which isn't helping ESPN. Iger just raised the price of DIS+ at the same time that they're stripping content from the service. It's gonna' be a lot tougher to monetize the content in a streaming model than it was with all those subscriber fees. The current tif with Charter is probably just the opening battle of a greater war...

 

[RamblinRed]

Ch

Charter’s 12 month net income in June was 4.65 Billion dollars. I don’t think that’s razor thin.

It’s down 15%. I agree that they’re losing their appetite for the content part of the market.

I expect that net income is from all their businesses not just their cable service. From the article it sounds like their get alot more profit (or at least profit margin) out of their other businesses than their cable TV unit.

 

[RonJohn]

Ch

Charter’s 12 month net income in June was 4.65 Billion dollars. I don’t think that’s razor thin.

It’s down 15%. I agree that they’re losing their appetite for the content part of the market.

Depends on how you look at it. That is about 8.5% net profit margin, which is below good. The numbers can look extremely high, but the ratios are not in the "good" range for the corporate world.

 

[Vespidae]

Interesting that with its current impasse with Disney that Charter is simply encouraging its customers to get subscriptions to FUBO or YouTube TV and making it easy for them to do so. Basically Charter just wants to make sure to keep the broadband relationship.

So I thought, let’s call Spectrum and complain. They sent me to the Retention Dept and knocked $40 off my monthly bill.

 

[bobongo]

So I thought, let’s call Spectrum and complain. They sent me to the Retention Dept and knocked $40 off my monthly bill.

Oooh, I'm gonna try that.

 

[Vespidae]

Oooh, I'm gonna try that.

They didn’t even try to convince me. Caved immediately.

 

[g0lftime]

An interesting note out of Dallas this weekend.
While SMU has agreed to give up Tier 1 media payouts for 9 years, its expectation is that the revenue it will receive from the other revenue pieces (Tier 2-3, NCAAT units, playoff revenue distribution, etc.) will allow it to make at least as much, if not more, than it currently makes in the AAC.

It makes their calculation make alot more sense. Yes we are getting similar to what we get today, but at least we are in a P4 conference now and set up much better for the future.

Even makes more sense for Stanford/Cal.
They are giving up roughly $16M per year (assuming ACC tier 1 share right now is approx $24M), but that would still mean they are getting everything else - which could amount to over $20M per year.



Obviously it is alot less than their payout from the PAC - Which I believe was about $37M last year, but likely more than they would have gotten if they had to join the Mountain West or had to try to rebuild a new PAC.

There was also a new Ross Dellinger article talking about how the ACC expansion came about. From that article is sounds like the additional revenue from the new members coming in at discount rates is going to be split close to 50/50 between equal payouts to all current members and money going into a performance based pot.

This performance based payout now in the ACC and pushed by FSU / Clemson, is just a smaller version of what they are complaining about with the SEC payout difference. It does nothing but gives advantage to the top teams to keep them on top. Makes it a lot harder for bottom half teams to get into the top. At least the NFL tries to give bottom teams a chance to move up. I will not be sorry to see FSU leave.

 

[Vespidae]

This performance based payout now in the ACC and pushed by FSU / Clemson, is just a smaller version of what they are complaining about with the SEC payout difference. It does nothing but gives advantage to the top teams to keep them on top. Makes it a lot harder for bottom half teams to get into the top. At least the NFL tries to give bottom teams a chance to move up. I will not be sorry to see FSU leave.

My brother went to FSU. They have a long history of being independent. He says, FSU could care less about the ACC or competing for conference titles. It’s just not part of their DNA.

 

[ThatGuy]

My brother went to FSU. They have a long history of being independent. He says, FSU could care less about the ACC or competing for conference titles. It’s just not part of their DNA.

Yep. My sister went there as well, and echoed those sentiments.

It's interesting to step back and look at human dynamics here, though. If you join a conference, you're effectively part of a "team." And what happens to a team when one member starts trying to look out for themselves over everyone else? The team suffers.

Or in most cases, the teammates decide they're tired of that person's sh!t, and quit blocking for them. That person gets knocked out.

I'm in the latter place right now - didn't used to mind FSU, but now I'm gunning for them. Out of conference foe or ACC foe, I hope they go down hard. And I hope our President and AD do everything they can to disregard FSU's wants at the negotiating table from here on out.

 

[Northeast Stinger]

So I thought, let’s call Spectrum and complain. They sent me to the Retention Dept and knocked $40 off my monthly bill.

Did that kind of thing for years. Seemed like every time I called they had just introduced a one time only special discount. The biggest deal I got was the first time I threatened to leave.

I eventually cut the chord.

 

[Oldgoldandwhite]

Two good articles on issues with the future of ESPN and cable in general.
Cable TV companies are starting to understand that the cable TV business isn't really that profitable for them and are starting to make long term strategic decisions based on the idea that they should play to their strengths (which includes potentially exiting the video business all together).
Interesting that with its current impasse with Disney that Charter is simply encouraging its customers to get subscriptions to FUBO or YouTube TV and making it easy for them to do so. Basically Charter just wants to make sure to keep the broadband relationship.

SBJ Media: Why this weekend is so important to Disney, Charter

www.sportsbusinessjournal.com

"Regardless of what a possible deal looks like, the die is cast. Charter has shown the stomach for dropping these channels is stronger than ever. The rate that Charter pays for TV networks -- especially sports -- has become so expensive that the cable operator’s margins are razor thin. Broadband and wireless are a much better business, with much higher margins, for cable operators."

"What’s the worst-case scenario?

If Charter gets out of the video business, and if other cable operators follow suit, media rights could be reset lower, which would have broad implications on team values and player salaries. Leagues and teams still would have media rights deals. But they wouldn’t be the same as they’ve seen over the past three decades, when the cable model benefitted sports leagues and teams more than anything else."

The Rise and Fall of ESPN’s Leverage

Charting ESPN’s rise, including how it build leverage over the cable TV providers, and its ongoing decline, caused by the Internet.

stratechery.com

Good reads!

 

[yeti92]

Did that kind of thing for years. Seemed like every time I called they had just introduced a one time only special discount. The biggest deal I got was the first time I threatened to leave.

I eventually cut the chord.

Octave done it sooner.

 

[Oldgoldandwhite]

My brother went to FSU. They have a long history of being independent. He says, FSU could care less about the ACC or competing for conference titles. It’s just not part of their DNA.

Who are they going to play if teams go to a 9, 10, or 11 game conference schedule?
Scheduling other sports will be a nightmare. Even ND knows this.

 

[Vespidae]

Who are they going to play if teams go to a 9, 10, or 11 game conference schedule?
Scheduling other sports will be a nightmare. Even ND knows this.

Don’t get me wrong. They want to be in the SEC for the money. But they don’t care about the conference. FSU cares about… FSU.

 

[roadkill]

They didn’t even try to convince me. Caved immediately.

This. I've done this every year for the last three. Promo expires. Call to complain. Get transferred to retention. They usually will have another 12-month promo they can give you (no guarantees, though).

 

[RonJohn]

It all depends on what the name of the conference is:

Scenario: Conference A wins 2 out of 2 interconference games. Conference B loses 2 plus the only other P5 game they play. Conference A has one of their top ranked teams lose to a mid-ranked team.

If this is the SEC: Winning OOC games is the bellweather of strength of a conference. I mean, the SEC just beats everyone that they play. No other conference can hope to even begin to measure up. The conference is sooooo deep that every single game you play is like playing the top team in any other conference. Just look, the middle of the SEC is SOOOOO strong that they can beat the top teams. Nobody in any other conference has such a tough schedule, nor can any team from any other conference hope to stand up against anyone but the bottom two teams in the conference.

If this is the ACC: OOC games are meaningless. The teams in the SEC are more concerned about conference games against teams that actually matter. Look at the ACC, the top teams can't even beat middle of the pack teams. If Clemson or FSU were in the SEC, they would be lucky to win 2 conference games a year and would never go to a bowl game.

If people were given the scenario without knowing which conference has which stats, they wouldn't know how to make a commentary, becuase all they can do is spin.

EDIT: Edited to add that if the exact same scenario happened in reverse next year, all of the SEC fans and sports commentators would say the exact opposite with the same certainty. They would totally forget their arguments from the previous year and would deny ever making those arguments.

As I stated in this post, ESPN's spin is that it was a bad week for the ACC. Two of the teams they cited, Clemson and GT, lost games which they said is bad for the conference. Apparently it doesn't matter than an ACC team also won those games. It apparently also doesn't matter that the ACC was 2-1 vs the SEC. It also doesn't matter that the SEC had what should be considered a bad week, it only matters that some of the ACC teams lost even if they lost conference games to ACC opponents.

 

[yeti92]

As I stated in this post, ESPN's spin is that it was a bad week for the ACC. Two of the teams they cited, Clemson and GT, lost games which they said is bad for the conference. Apparently it doesn't matter than an ACC team also won those games. It apparently also doesn't matter that the ACC was 2-1 vs the SEC. It also doesn't matter that the SEC had what should be considered a bad week, it only matters that some of the ACC teams lost even if they lost conference games to ACC opponents.

Would be nice if the ACC could sue ESPN over this.

 

[CEB]

Would be nice if the ACC could sue ESPN over this.

I’m sure this is hyperbole ....

BUT if I were in charge of the ACC and I had a long term contract with an entity that was publicly bashing me (especially in light of the unrest already created by ACC members), I would sure as hell be on the phone to someone pretty high up expressing my displeasure. They had to dig pretty deep to make this a bad week for the ACC.