Big Ten Network pushed to profitability using a model other conferences might followBy David Mercer, AP
Monday, September 13, 2010
Big Ten Network making money because of fan wishes
CHAMPAIGN, Ill. — One of Kay Monigold’s first big headaches when she bought a small cable TV business in Illinois and Indiana in late 2007 was a startup cable channel specializing in Big Ten sports.
The Big Ten Network wanted her Avenue Broadband Communications Inc. to pay what Monigold will only say was “a lot of money for my little company” and make it available to virtually all her customers. She quickly learned she had to do it.
Die-hard sports fans who were also her customers demanded that she give them Indiana and Illinois basketball — and many of their games were only to be found on the new network.
“We were in the basketball season in December of 2007, and we were losing customers. At that time we concluded that we needed to launch it,” she said.
The Big Ten Network introduced itself just before the football season started in 2007. Outside of live football and basketball games with teams not quite attractive enough for ABC, ESPN and others, its earliest programs made some viewers scratch their heads — unpolished studio shows with few big names and heavy doses of old, taped games.
Well, the network has come a long way since then.
Neither the conference nor the Chicago-based cable network publicly talk about their finances, but, according to the Sports Business Journal, three years after it went on the air the network is delivering close to $70 million a year to the Big Ten.
With other conferences including the SEC, Pac-10 and Big East, and even the University of Texas, all talking about potentially forming their own networks, the Big Ten Network is a model for — and some might say the envy of — big-time college sports around the country.
“They have connected a lot of the dots and they are very powerful,” said Christine Plonsky, who is senior associate athletic director at the University of Texas and the school’s point person on its push to create a Texas-only channel.
Multiply Monigold’s unhappy customers out over millions of households across the Midwest, plus Big Ten fans spread out around the country and, in a nutshell, you can see why the network works and, some experts say, is just getting started.
Cable companies pay the network, on average, 36 cents a month for every subscriber, according to the SNL Kagan, a firm that tracks media business financials. Last year, there were almost 42 million subscribers generating $182.5 million for the network. It brought in $21 million in other revenue, mostly from ads.
According to Kagan, the network turned a 30 percent profit in just its third year, and should hit $272.9 million in revenue and a 36 percent profit in 2012.
Fans, even a relative handful of them, give sports networks like the Big Ten channel real power, Kagan senior analyst Derek Baine said. The 36 cents BTN is paid is actually small compared to some sports channels.
“Most of the regional sports networks get two to three bucks per set per month because you’ve got these rabid fans on there, and if they don’t get their sports networks, they’re going to drop,” Baine said.
And they pay, no matter the season, no matter the programming and no matter whether they’re watching or not.
“I’m having to pay the same amount that I did when basketball season was still going on,” Monigold said in early summer, when the Big Ten’s lineup is dominated by archived football and basketball games and minor sports wrapping up their seasons.
In fact, even during football and basketball seasons, not that many people tune in to the network when it isn’t showing live football and basketball and sports news shows, according to Nielsen Co. ratings. Airings of past football and basketball games and live or taped current sports such as volleyball or wrestling regularly draw no more than 1,000 households in the Big Ten’s biggest markets — and often fewer than that.
Mark Silverman, president of the network since it began, said the network is slowly adding higher-quality programs, including “Big Ten Icons,” a weekly show hosted by legendary college football broadcaster Keith Jackson.
Silverman says that in addition to the fans, and Big Ten Commissioner Jim Delany’s idea that a network devoted to just one conference would work in such a big way, he had another tool in his belt that made Big Ten Network an early success.
While the conference owns 51 percent of the network, Fox Cable Networks owns 49 percent, and at the time the network launched, Fox and DirecTV had a common owner, News Corp. DirecTV carried the Big Ten Network from day one, giving those cable customers a place to go if their cable outlet didn’t carry the network, and giving the network leverage in what were often difficult negotiations with the larger cable companies, as well as the smaller companies like Monigold’s Avenue Broadband.
“It was really just this great combination of assets,” Silverman said. “It really just enabled us to succeed.”
The network’s success and the money it generated have led every other major conference that didn’t already have some plan for its own TV to start drawing one up.
The SEC and ACC have their own programming carrying the conference brand on ESPN and Raycom, respectively.
But others look to follow the Big Ten.
Pac-10 Commissioner Larry Scott has made clear he intends to start a network at some point, and said in interviews this summer that he’d like it showcase higher-level games than those featured on the Big Ten Network. Right now, ESPN/ABC and Fox Sports Net hold the rights to its football games and FSN owns the basketball rights, but those contracts expire next year.
Eight of the Big 12 schools met this summer to talk about the potential for their own network. Networks now own the rights to football and basketball games, but negotiations on new deals are planned for next year.
Neither Big 12 nor Pac-10 officials responded to requests for comment for this story.
Whatever the Big 12 schools do, they’ll do to a large degree without Texas, which has worked for several years with a company called IMG College toward its own network.
Just what that network will offer is a question mark. Texas football and basketball rights are part of the deals the conference has with ESPN/ABC and Fox.
“I can tell you right now IMG College is now projecting a lot of this without live games,” Plonsky said, adding that there may be an opening for the school to hold onto the rights to a live game or two in future negotiations.
Plonsky says Texas looks to the Big Ten model for some ideas — she says she’s known Delany for years and, at his request, talked to network staffers early on about her own experience working on televised Big East basketball years ago. She adds that football will have to be a heavy presence, even if most of that comes in the form of highlights and news.
With more than 450,000 Texas alumni around the country and an audience for just about any team wearing UT’s burnt orange, “I am very confident that this will become a reality for us,” she said.
Silverman won’t handicap the odds of the other conferences succeeding.
But he admits that he has a hard time imagining the Big Ten Network without one of the conference’s powers like Ohio State.
“That’s just not the way the conference works — I would imagine that would have caused issues,” he said, noting that a big reason his network works well for the conference is that the schools — from top dogs Ohio State and Michigan all the way down to Indiana and Purdue — share the money equally.
And that model, he said, is something that clearly not all conferences can follow.
“It’s not a one size fits all,” he said. “Some are going to find it may be something for them to explore, and others are going to find that maybe it’s not.”
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