CNBC: Not Everything Turns to Gold For Texas Longhorns

[JudInKC]

FYI...

http://www.cnbc.com/id/44257343?__source=RSS*blog*&par=RSS

On Friday, ESPN's The Longhorn Network will debut. It's all Texas all the time and the money associated with the deal and the fear that it could cause them to leave the Big 12, has forced Texas A & M to look east and consider joining the SEC.

And while everything is big for Texas — a $150 million-plus athletic department budget and a stadium that now seats over 100,000 — it's not necessarily the unstoppable financial juggernaut that so many have called them.

Let's start with the Longhorn Network, which launches Friday, but has no carriers. Texas will receive $10.98 million a year and receive guaranteed three percent bumps through the life of the contract.

But Texas will only receive the truly big bucks — equal to 70 percent of the net revenue — after ESPN nets $295 million on the project. That might never happen. Carriers will surely come, but at what price will they accept a deal? And how many Longhorn fans will push their local carriers to get something done with one football game and eight men's basketball games? ESPN officials did not immediately respond to comment.

Then there's the issue with ticket prices. Texas is charging $70 for the Rice game, $75 for Kansas and Kansas State, $85 Oklahoma State & BYU and $95 for Texas Tech. Coming off a horrible 5-7 year, it appears like there's a glut in the marketplace for the non-marquee games and fans easily see that now that StubHub is the official secondary ticketing site of the Longhorns.

With hundreds of tickets under $50 for the Rice game, Texas sent out an e-mail to its season ticket holders this week offering half-price seats on its non-marquee games. Some of those seats are in areas where people have paid a donation on top of the face value, showing just how overpriced some of its tickets are.

And it's only going to get worse if Texas doesn't turn it around this year and there are no guarantees of that. Until last October, Texas had the longest active ranked streak in the AP Top 25. They were ranked for 162 weeks dating back to the 2000 season.

[saucysoonergal]

That there is funny stuff! ;)

[Herr Scholz]

UT's getting $300M guaranteed before the 70% of profits that might come later so no worries on our end. And I wouldn't bet against ESPN making money on this deal.


http://austin.culturemap.com/newsdetail/08-23-11-21-02-longhorn-network-distribution-deal-is-imminent/?utm_campaign=News&utm_source=SocialFlow&utm_medium=Twitter


Longhorn Network distribution deal is near

By Kevin Benz
08.23.11 | 09:02 pm
As fans and sports columnists gnash their teeth, the Longhorn Network (aka: ESPN) has been working late hours trying to get their network distributed not just in Austin but nationwide before they flip the switch on Friday morning (August 26). Today, the buzz is decidedly on the side of getting it done, and several sources tell me the Time Warner Cable deal is down to the "nitty gritty" details, if not a deal with Comcast (Houston's main cable provider) or Direct TV. In other words, with Time Warner Cable, the hard work is done.

Today, University of Texas Athletic Director Deloss Dodds said as much in a press conference announcing an unrelated partnership with St. David's Hospital. "You might have heard we will launch the Longhorn Network Friday morning," he said, "and it looks like it will be available to you. We have great news coming, but we can't announce anything yet."

Word is that announcement will happen Thursday.

Yesterday the Sports Business Journal reported that several deals with small cable outlets have already been inked and deals with Verizon and Grande in San Marcos (covering part of the Austin area) are very close.

No one should be surprised at how long this has taken. These nationwide deals are enormously complicated (and this is a nationwide deal) and when two goliaths like Time Warner Cable and ESPN / ABC disagree, often it's the viewer that gets lost in the fog of self-interest.

And don't blame Time Warner Cable here in Austin, they have little to do with it. This negotiation is happening among the biggest of big-wigs in New York not Austin. Most often deals like these are struck as the clock ticks down. That's just the nature of our modern cable TV business.

And it is big business. Reports suggest ESPN asked cable systems to pay 40 cents per subscriber per month for the Longhorn Network to be carried on expanded basic cable in Texas (that means nearly everyone gets it, no one pays extra for it). Do a little math here — that's $4.80 per year per subscriber. Time Warner Cable, Texas largest cable provider serves around 2 million expanded basic subscribers in Texas. Multiply that by $4.80 and you get close to $10 million from just one provider in the state. That's real money — and you wonder why your cable bill keeps going up?

Beyond the dollars, discussions involve what channel to assign, 1647 or 10 (which would you want?), whether to include it in a sports package (where only sports enthusiasts pay for it) or basic cable and what other channels are involved (ESPN, ESPN2, ESPN3, ESPN News, Disney, ABC Family are all related).

Speaking to representatives on all sides, I can tell you there is no one involved who wants to face the ire of a multitude of Longhorn fans descending from the stands at DKR smelling blood in the water. Not getting it done would be a public relations disaster for everyone, including the LHN.

Direct TV customers however may be out of luck. ESPN's contract with DTV ends this year and reports suggest ESPN has no interest in negotiating the Longhorn Network until then. Enjoy your NFL Season Ticket folks.

Otherwise, do not worry. There is too much on the line for this not to happen.

[saucysoonergal]

Srsly, schloz, does anybody really want to watch it? It is a money loser for everyone!

[Herr Scholz]

Srsly, schloz, does anybody really want to watch it? It is a money loser for everyone!
$300M guaranteed to us for 3rd tier broadcasting rights is a money loser? Mkay. And I suggest you read what I bolded in my previous post. ESPN will be just fine collecting nominal $0.40 fees from millions of subscribers.

And yes, plenty of people will be watching it. Besides all of the UT football coverage it will provide, you don't think the next Brittney Griner in hoops or Cat Osterman in softball will enjoy all of their games being broadcast? Not to mention top baseball talent.

[Sooner_Tuf]

Forty centavos? Way overpriced.

Texas - it's like whole nother joke

[3rdgensooner]

I'm holding out hope for a nice dose of schadenfreude over this.....some day....

[Sooner_Tuf]

$300M guaranteed to us for 3rd tier broadcasting rights is a money loser? Mkay. And I suggest you read what I bolded in my previous post. ESPN will be just fine collecting nominal $0.40 fees from millions of subscribers.

And yes, plenty of people will be watching it. Besides all of the UT football coverage it will provide, you don't think the next Brittney Griner in hoops or Cat Osterman in softball will enjoy all of their games being broadcast? Not to mention top baseball talent.

How many people do you think will not pay the forty cents by switching cable companies? I know I would. I'll tell what is guaranteed if the LHN doesn't make money ESPN will shut it off. There is no way they entered into a twenty year agreement with no way out if you guys don't perform.

5-7 lol

[Peach Fuzz]

How are they GUARANTEED to get 300 mil? Out of everything that's going on in this crap economic world, UT is seriously going to get 300? I doubt.

[The Maestro]

I bet folks can't wait to watch swimming, diving, softball, etc. How many "Earl Campbell Hot Links" ads can they run?

[Bourbon St Sooner]

$300M guaranteed to us for 3rd tier broadcasting rights is a money loser? Mkay. And I suggest you read what I bolded in my previous post. ESPN will be just fine collecting nominal $0.40 fees from millions of subscribers.

And yes, plenty of people will be watching it. Besides all of the UT football coverage it will provide, you don't think the next Brittney Griner in hoops or Cat Osterman in softball will enjoy all of their games being broadcast? Not to mention top baseball talent.

I'm sure the next Brittney Griner in hoops can't wait to play in C-USA.

[prrriiide]

They aren't getting $.40 per sub. Not. Going. To. Happen.

Here are the per month sub fees for sports cable networks:

ESPN - $4.08
FoxSports Net - $2.37
TNT - $.99
NFL - $.75
ESPN2 - $.54
Big Ten Network - $.36
NHL Network - $.35
Fox College Sports - $.34
VERSUS - $.26
Golf Channel - $.25
TyC Sports Int'l - $.25
MLB Network - $.24
NBA TV - $.22
MtnWest Sports Net - $.20
CBS College Sports - $.19
Fox Sports Espanol - $.19
ESPN Classic - $.18
ESPNews - $.17
ESPNU - $.16
Fox Soccer - $.16

They just keep getting cheaper and cheaper until you hit The Sportsman's Channel at $.03/sub/month.

The LHN doesn't have even a fraction of the appeal of a MLB or NBA network, but you arrogant jackwagons think you're going to get more per sub than they get? You can try, but the MSO's will charge you for new underwear after they **** theirs laughing you out of the negotiating room.

2 million viewers in texzass, you say??? The MSOs don't give a crap. This is about the bottom line and what they will get for carrying the LHN, and it isn't even going to be close to worth $.40/sub to them, even with 3rd tier rights. The Big10 Network has 7 of the top 25 television markets. LHN will have 2. In total, texass MSAs have just over 9 million TV sets. Big10 MSAs have over 3 times that number. Big10 Network gets $.36/sub, and they have a MUCH larger national footprint than the LHN.

Think about the logic of that. The only 3rd tier games that will be broadcast on the LHN will be texass based. SFAU, Rice, UTEP, UTSA. They aren't going to broadcast Brown vs. Princeton. So the viewers of those 3rd tier match-ups will already be LHN subscribers on basic cable. The MSOs in New Jersey aren't going to offer LHN on their system just because it might show a Princeton game once a year.

Look at who the advertisers will be. National accounts won't spend much on the LHN because it doesn't have a broad enough reach. You're beloved little network is going to be airing 3 minute mini-infomercials for Pos-T-Vac and HiDef sunglasses. And guess what? Those sponsors don't pay sh!t. Local and regional advertisers can take up a bit of the slack, but for a network to become profitable, it MUST have large national corporate accounts - Home Depot, Sears, Wal Mart, Exxon, car manufacturers, etc.

And the other sports you mention? College baseball? Softball? Women's basketball? Really? REALLY????? You know, there's a reason that there aren't WNBA and college baseball networks already. They don't make financial sense.

ESPN inked their deal with texass under the assumption that high school content would drive viewership. That's gone. But since they can't openly admit that, they have to suck it up. At best, the LHN will break even on operating expenses. At worst, it's going to be a money pit for ESPN and the Mouse. My opinion (as someone that works for a large cable conglomerate) is that the LHN will lose money. It will be around for a few years before the Mouse pulls the plug, but it will lose money, probably $1-$2 million a year. It all looks good on paper, but after a couple of years of those set-top boxes reporting back on viewership numbers, the ad rates will drop into the basement/fire-sale price bracket, and the LHN will be begging Extenze and Oxy-Clean for their advertising dollars.

[101sooner]

That was a solid post.

Here's the way I look at it. I'm about as die-hard an OU fan that you will ever find. If there were an OU network, I could see me watching a few caoches shows in the first few months then gradually forgetting the chanel even existed. I simply will not watch OU vollyball or golf or track on TV. Nothing against them, I just don't have the inclination to sit in front of the TV and watch those sports. The sports I will watch are men and women's hoops and football and they are already televised. Even if they could show High School football, I would't watch it very often and this fantasy that the *'s have that the entire state will be glued to the TV to watch Billy Bob Blowhard from Permian Cy Odessa play on Friday night is WAY overestimated.

[FtwTxSooner]

Verizon FIOS just announced they picked up LHN starting Sept. 1. F 'em.

[OrlandoSooner]

Verizon FIOS just announced they picked up LHN starting Sept. 1. F 'em.

Cancel your Verizon service and tell them why...

[bluedogok]

The funny thing is FIOS is not available in Austin, it is available in some of the suburbs around Austin. I'm sure that Time Warner in Texas will pick it up eventually but it will be right before the Rice game.

[BigTip]

They aren't getting $.40 per sub. Not. Going. To. Happen.

Here are the per month sub fees for sports cable networks:

ESPN - $4.08
FoxSports Net - $2.37
TNT - $.99
NFL - $.75
ESPN2 - $.54
Big Ten Network - $.36
NHL Network - $.35
Fox College Sports - $.34
VERSUS - $.26
Golf Channel - $.25
TyC Sports Int'l - $.25
MLB Network - $.24
NBA TV - $.22
MtnWest Sports Net - $.20
CBS College Sports - $.19
Fox Sports Espanol - $.19
ESPN Classic - $.18
ESPNews - $.17
ESPNU - $.16
Fox Soccer - $.16

.

You forgot to list ESPN 8, "The Ocho" - $.00001