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Pac-12 Confidential

Bud Withers offers an inside look at the Pac-12 Conference and the national college scene.

September 2, 2011 at 10:57 AM

Pac-12 Networks: How to get rich quick

Many folks, myself included, stumble a bit on the fine details of sports-television contracts. We tend to focus on the pragmatic – as in, Is the game I want to watch on the channels I have available?

Well, the Pac-12 last week announced its new president of Pac-12 Enterprises, 54-year-old Gary Stevenson, whose first responsibility is building and overseeing the conference TV networks set to launch in a year. That led me to AJ Maestas, whose Chicago-based company, Navigate Marketing, does media research and measurement.

Maestas — a Washington grad, by the way – had a fairly jaw-dropping forecast on the future of the Pac-12 Networks, putting it in numbers that the most uninitiated of us can understand.

“Off the top of my head, four years from today, I would not be surprised if the Pac-12 schools saw $12-15 million distribution (each) from the Pac-12 Networks,” Maestas said. “The truth is, it could actually be 30-40 percent higher than that.”

That’s a thunderbolt.

You knew already of the 12-year, $3-billion ESPN-and-Fox deal engineered by Pac-12 commissioner Larry Scott in the spring. When it begins to take place a year from now, that’s going to be worth roughly $21 million annually for each team in the league.

But the network, which Scott announced late in July, has been a fuzzier concept. I’d say $12-15 million brings a lot more clarity.


For UW and WSU fans, here are two rough yardsticks:
Washington: In the academic year 2010-11, the Huskies made $6,215,000 from all TV sources, according to associate AD Paul King. That includes conference TV shares in football and basketball and those from Fox Sports NW (now Root Sports).
If Maestas is on the mark, the network would beat that total by 100 percent or more, and never mind the Fox/ESPN over-the-air cash cow.
Washington State: The Cougars’ athletic budget has been running in the $30-35 million range. So if Maestas is correct, their take from the two Pac-12 TV revenue sources would pretty much equal their entire current budget. That’s before you consider all the other sources of revenue, including donations, ticket sales, advertising, etc.
“In my opinion, it will be the most successful sports-network launch in history,” Maestas continued. “It’s an absolute home run, period.”
Why?
First, Pac-12 Networks lined up four partners – Comcast, Time-Warner, Cox and Bright House – that already reach 40 million homes. So if Pac-12 Networks launched today, it’d be No. 11 in the country in sports networks for distribution.
(According to Sports Business Journal, these were the top-10-distributed sports networks for June, rounded off: 1, ESPN, 100.1 million TV homes. 2, ESPN2, 99.9 million. 3, Golf Channel, 83.8 million. 4, Speed, 78.5 million. 5, Versus, 76.2 million. 6, ESPN News, 74.2 million. 7, ESPNU, 73.2 million. 8, NFL Network, 56.9 million. 9, MLB Network, 56.2 million. 10, NBA TV, 55.6 million.)
While Maestas says the 40-million start is a robust number, he adds, “In 12 months, I think they’ll easily pick up another 20-25 million households.”
All that would do is vault the Pac-12 Network saturation past any of the pro leagues’ networks. Remember, the conference hasn’t even gone to DirecTV or the Dish Network yet – or all the other cable carriers out there.
I asked Stevenson, Scott’s new hire, if Maestas’ estimate of 20-25 million more homes by the launch is in the ballpark.
“Could it happen? Yes,” Stevenson told me. “Will it happen? We don’t know, but we believe that the content we have is valuable, and I think we’ll have serious discussions with every company (that distributes). I don’t think anybody is going to say, ‘No, we’re not going to talk to you.’ ”
Two aspects of Scott’s network apparatus set it apart. First, the league is sole owner of the rights. On the other hand, the successful Big Ten Network partnered with Fox, which owns 49 percent.
The Big Ten thus took less risk. But the Pac-12 Networks won’t merely have water polo games between Stanford and USC. Scott, in making the Fox/ESPN deal, promised 36 football games – three a week – and 120 men’s basketball games for the network. So the league will be offering some high-end stuff.
The figure behind the scenes in much of Scott’s blockbuster success in two years is Kevin Weiberg, who has been instrumental on at least two fronts – expansion and the Pac-12 Networks. Before Scott hired him as deputy commissioner 18 months ago, he was Big 12 commissioner, so he knew the sacred cows and vulnerabilities of that league (and boy, have those been exposed). But more recently, he had been with the Big Ten Network for 18 months.
Says Maestas, “I think what we’re seeing in the Pac-12 Networks is Kevin Weiberg’s education in the process from launching the Big Ten Network. I think he said, ‘We get to do it again; here’s the 2.0 version.’ ”
As for Stevenson, like a lot of the key people now in charge at the Pac-12, he has a heavy background in marketing of pro sports. He has been with the NBA, and was chief operating officer when the PGA launched the Golf Channel in 1995. Most recently, his company, OnSport, represented some heavyweight clients like American Express, Nationwide and Wachovia in the sports marketplace.
Aside from some good matchups in high-profile sports, Stevenson sees the Pac-12 Network as a place “to really tell stories. There’s so much content, and our job is to capture it and let the fans see it.”
He talked about tracking down legendary coaches (think Don James) and having them tell stories, about going deep into the fabric of Olympic sports athletes’ lives, about fleshing out details of traditional rivalries in the league, about profiles of hall-of-fame athletes.
Stevenson and Scott bumped into each other at the NBA All-Star game last winter, and it led to the latest key hire in Walnut Creek. At the time, Stevenson wasn’t necessarily looking to jump back into the marketplace.
“You get few opportunities in a professional lifetime,” he explains, “to do something unique.”
For the league members, Pac-12 Networks looms as something uniquely profitable.

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