Fox to Give Big Ten Lots of Money to Broadcast Some Games

Live sports remains the only television property that consistently draws audiences that -- gasp! -- actually still watch commercials, which remain a critical financial component of the television business. The media rights packages that include live sports have exploded in value over the last decade and that explosion in media rights has fueled college football's arms race in terms of facilities and coaching salaries. The Big Ten signed their existing media rights deals prior to the current explosion in rights fees, although the eye-popping success of BTN has kept the Big Ten flush with cash anyway.  But now it's the Big Ten's turn to cash in on the media rights deals -- and they most certainly are cashing in.

Fox Sports is close to a Big Ten deal; package includes about half the available media rights. Here's SBD's story: https://t.co/Om0L6iZTmP

— John Ourand (@Ourand_SBJ) April 19, 2016

Per the report from Sports Business Journal:

However, the two sides have agreed on basic terms that will give Fox the rights to around 25 football games and 50 basketball games that it will carry on both the broadcast channel and FS1 starting in the fall of '17. The deal runs six years and could cost Fox as much as $250M per year, depending on the amount of rights the Big Ten conference puts in its second package.

This is a gigantic increase from the Big Ten's current deal.  Presently the Big Ten receives around $100 million per year from ESPN/ABC and $12 million per year from CBS to air around 50 football games and 100+ basketball games (basketball-only on CBS, of course). Under the Fox deal, the Big Ten will be receiving over twice as much money in media rights -- for a package that contains half as many games.  They're also free to negotiate with other networks (most notably ESPN/ABC, but also NBC/NBC Sports, CBS/CBS Sports, and the Turner networks of TNT/TBS/etc.) for the remaining games -- approximately 25 football games and 50 basketball games.  If they can get a similar deal from another network for their remaining games (which seems likely), then the Big Ten could be looking at getting up to $500 million per year for the media rights to their games.

Note that this will not impact BTN.  The Big Ten's media rights are divided into two tiers, Tier 1 and Tier 2. "Tier 1" games are those presently on ABC, the ESPN networks, and CBS.  In the future, those games will now be on FOX, FS1, and additional networks TBD. "Tier 2" games are those presently on BTN.  In the future, those games will... still be on BTN.  Remember: BTN is a gigantic cash cow for the conference.  They are going to continue to air plenty of games (especially basketball games) on it for the forseeable future. BTN is a huge success because of the fee that they are able to charge cable providers to carry it (which is in turn passed along to consumers); it's hard to charge big fees for the network if there aren't games on it that people want to watch.  As well-crafted as The Journey is, no one is tuning into BTN just to watch that.

It's worth noting that not only could the Big Ten be getting five times the current rate for their Tier 1 rights, but they're actually going to be getting a dramatic increase in media rights fees while providing fewer games for their television partners to air. As a result of the 9-game conference schedule being implemented this year, there will be fewer football games involving Big Ten teams this season.  There were 112 games last year involving Big Ten teams -- there will be 105 games this year involving Big Ten teams.

Let's run through a few questions about the deal and the move to FOX.

When does the deal begin?

The deal takes effect with the 2017-18 season, so a year from now.  Iowa games next year for the season beginning in fall 2016 and ending in spring 2017 will continue to air on ABC, ESPN, CBS, etc. Fall 2017 is when you'll begin to see Big Ten games air on FOX, FS1, etc.

What channels are games going to be on?

No details about the deal have been formally announced yet, but the SBJ report says that the games will be carried on the broadcast channel (FOX itself) and FS1.  Fox's empire of channels also includes FS2, FX, FXX, and several regional Fox Sports networks.  It doesn't seem like any of those channels will be used to air Big Ten games at this point, but time will tell. FS2 has fairly low availability at this point, so if games do wind up on there, it could be frustrating for viewers.  Still, given the incredible amount of money Fox is paying the Big Ten to air their games, it seems likely that they're going to do what the can to maximize their return on those games, which likely means putting them on their most visible outlets -- FOX and FS1.

Is this going to impact when football games kick off or when basketball games tip off?

I hadn't considered this point at first, but The Daily Gopher raised it and it's interesting. ESPN/ABC has long been pretty locked into 11 AM/2:30 PM/7 PM (all times CT) start times for games and we've gotten accustomed to that. FOX has been willing to air Pac-12 football games at different times (usually starting a bit later than the above-listed timeslots), but part of the reason for that was likely due to the Pac-12 being (duh) on the West Coast. Given that the Big Ten is a Midwest/East Coast conference, it wouldn't make sense to push back start times too much.  But we'll have to wait and see.

How much money will this make for Big Ten schools?

A lot.  A ridiculous amount of money, frankly. The Fox deal alone should net Big Ten schools around $18 million per year on average (note that Nebraska, Maryland, and Rutgers are still ramping up to receiving full shares, if memory serves). Assuming the other half of Tier 1 media rights sells for a similar amount (and, again, there's little reason to expect that they won't), that's roughly another $18 million per year on average for Big Ten schools. That doesn't include revenues from BTN; with those factored in, Big Ten schools could receive over $40 million per year just for media rights. That number could even climb near $50 million, depending on the value of the Big Ten's deal for their other Tier 1 media rights and the success of BTN over the next few years.

How does that compare to the deals other conferences have struck for their media rights?

The SEC is in the middle of a 13-year, $3 billion deal with ESPN and CBS that pays league schools about $16.5 million per year. That doesn't include the SEC Network; last year Andy Staples estimated that each school may have received an additional $5.5 million from the network. The Pac-12 receives an average of $250 million annually for their entirely media rights deal -- or about $21 million per year for each Pac-12 school. The Big 12 and ACC also make roughly $20 million per year per school in their media rights deals.

How long is the Big Ten's deal with Fox?

Intriguingly, the deal is only for six years, meaning that it will expire in 2023. Presumably the Big Ten's deal for their other Tier 1 rights will also expire around the same time. That means the Big Ten's media rights will hit the market again before the media rights for any other Power 5 conference hit the market. The Pac-12's current deal ends in 2024. The Big 12's current deal ends in 2025.  The ACC and SEC deals don't end until the 2030s. Jim Delany and the Big Ten reportedly wanted a longer deal than six years (long-term financial security is nice!), but this alternative could leave the league well-positioned, too. It's unclear what the marketplace for television/cable will look like in seven years, but it seems unlikely that the public appetite for live sports will be diminished. The Big Ten will be in pole position to take advantage of whatever marketplace exists at the time.  If cable is still a thing, the Big Ten will likely cash in with networks desperate for live sports programming.  If internet streaming has taken over the marketplace, the Big Ten should be able to pivot to that brave new reality, too.

Hey, how are online media rights under this new deal going to work anyway?

Good question. The SBJ report says that the conference "is holding back some digital rights that it will offer to digital media companies."  Exactly what that means is very much TBD.  Could it mean Big Ten games on Netflix?  Hulu?  Apple TV?  YouTube (or another Google-affiliated outlet)?  Maybe!  It's also not clear what impact that might have on games being on digital services like WatchESPN/ESPN3, BTN2Go, or (now) Fox Sports Go. WatchESPN and BTN2Go are generally good services that work pretty well; Fox Sports Go, on the other hand, is a generally crappy service that tends to work poorly.  If you rely on the internet to watch sports, you might want to start hoping that a) Fox Sports Go improves dramatically or b) another company handles online coverage of games.  Again -- lots of uncertainty here.

How is this going to impact exposure?

This is probably the biggest drawback to the Big Ten moving games to FOX and FS1.  The ratings -- and attention -- that games on those networks get tends to dwarfed by similar games on ABC/ESPN. Look at the college football TV ratings from 2015 archived here -- they're not pretty for FOX/FS1. The Big Ten -- and FOX -- are banking that those numbers are going to go up when they start broadcasting games involving teams with massive Big Ten fanbases and while the ratings will certainly increase, it seems fanciful to think that they're going to increase to a level near ABC/ESPN.

It's for this reason that ESPN/ABC remains the most likely partner for the Big Ten and the remainder of their Tier 1 media rights. The exposure that ESPN/ABC can offer is still unmatched by any other network (or combination of networks), so abandoning them entirely seems like an utterly idiotic notion. The Big Ten can't afford to simply chase the money and wind up playing games that are seen by far fewer people. The negative impact of that might be limited in the short term, but it could be extremely harmful in the long term and that's not something the Big Ten should toy with, considering that the demographic trends of their home region are already working against them.

So what's good about the Fox deal for the Big Ten?

Other than the money?  Because there is an awful lot of money involved.  Well, it increases the likelihood of Gus Johnson calling Big Ten games, which could mean more moments like this:

It also increases the likelihood of Bill Raftery calling Big Ten basketball games, which could be a lot of fun (assuming you like Raftery's style, of course).

What's not so good about the Fox deal for the Big Ten?

Other than the loss of exposure (discussed above), there's an increased likelihood of seeing more Colin Cowherd, Clay Travis, Jason Whitlock, and [insert annoying blowhard of your choice] on your TV now.  That's pretty unfortunate.

There's also the matter of the actual quality of FOX broadcasts, which has often seemed lacking when it comes to their college sports broadcasts.  Their BCS bowl coverage was infamously terrible (unless, of course, you were a fan of constant cutaways to marching bands and poorly informed commentary) and while it's improved somewhat since then, it still seems lacking at times.  ESPN, for all their (many) flaws, is generally very good at just broadcasting the dang game.

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As usual, Friend of the Pants Frank the Tank has an excellent analysis of the Big Ten-Fox media rights deal as well.  You should definitely read it.