Monday, May 1, 2017

Some Big Ten Notes, ESPN and Sublicensing

* The matchups for the third year of the Gavitt Tipoff between Big Ten & Big East schools should be announced in the next few weeks (they showed up on May 3rd last year).  For the first time that I can recall, there appears to be no conflicts with respect to either a Big East or Big Ten school being in another event that would preclude them from a game.

I would like to believe that Michigan St. would be involved as they are the only Big Ten school to have not appeared in the first two years, though they will face Duke in Chicago earlier in the week.

* While we wait on the Big Ten announcement of rights deals with FOX Sports and ESPN (do believe its coming, more on that in a moment), Ad Age reports that FOX Sports has already begun marketing pitches to advertising agencies and those presentations have included that FOX Sports will have Big Ten events.   I realize we, myself included, can get a bit tinfoil hat-ish when an announcement isn't immediately following credible reports from sports media, but we're in the window of the marketing junkets for the next television season and neither side would likely be willing to talk about these items in front of advertising execs if they didn't have the goods.

* You've probably heard from several outlets regarding layoffs at ESPN, and it sucks because some of those people's work you've either read or heard from them on television, radio or podcasts.  In any field, no one wants to see layoffs.  To dovetail this into why there hasn't been a Big Ten rights announcement, here's my thoughts, some of it anecdotal:

These ESPN layoffs have been rumored for multiple months, and during these months, I can't quite recall ESPN announcing any major rights acquisitions, though they were included in bid BAMTech made for the UEFA Champions League rights.  There may have been some smaller announcements.  Sure, many rights have been locked in for some time too, so there haven't necessarily been any major rights floating out there.  From a PR standpoint, I believe these layoffs had to be done far enough in advance to allow the "smoke to die down" before going in front of advertisers and saying anything about new agreements or programming initiatives (the rumored Mike Greenberg morning show).

In my opinion, with a marketing upfront in mid-May, the layoffs had to have "space", whatever that timeframe turns out to be.  I've seen, first hand, layoffs in front of me and then a major marketing initiative that had multi-million dollars committed announced within 24-48 hours.  It left those who weren't laid off with a terrible taste in their mouths and a PR staff trying to tell those who were still employed that this initiative wasn't related to those layoffs, the cost of that initiative would pay long-term dividends and was a small part of that marketing budget.

* Had someone ask about whether ESPN would either broaden sublicense agreements or adjust existing ones.

1) I don't think they'd adjust existing ones, namely because if the terms of that agreement are of a favorable price to the other party, such as CBS Sports Network with the MAC and American Athletic Conference, or presumably whatever bundle of men's basketball games CBS buys from ESPN to air on their broadcast network, what incentive does CBS have to adjust it if it increases what they pay to ESPN if those agreements are locked in for 2-3 years?

2) Could ESPN try to sublicense other properties that they aren't today?  Certainly possible, but the price point has to be right and there has to be a market for that content where others are willing to buy.  A few years back, ESPN wanted to sublicense a portion of their US Open tennis content to Tennis Channel but TC found the price ESPN had set too high.  Maybe ESPN goes back to the market to try to re-sell those items.

Over the past few years, ESPN has sold off its final year of the The Open Championship to NBC instead of working a lame duck year.  Same with rights to NHRA, which were cancelled a year early so they could start an agreement with FOX Sports.  Properties like IndyCar, which are expiring in the next 18 months and had layoffs with two on-air people, could be targeted for an early non-renewal or the possibility of the rights being sold off if a new rightsholder comes in for those races.

And if you think Longhorn Network is a good buyout target, pump the brakes.  If you think they could get out from under by selling to, say, BAMTech, note the part about ESPN (or Disney??) having to majority own BAMTech, which they do not at this time but have the option to become the majority owner over the next several years.  And, to be honest, selling to BAMTech feels like it would be an accounting trick & just moving a property over to someone else's balance sheet to make yours look good, but I don't know how Disney's balance sheet is structured.

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