The SEC Network is heavily anticipated, and for good
reason. When it launches next week, millions of viewers will have
access to a channel dedicated to some of college
football's most dominant programs. But
's ESPN and the conference aren't creating the network out
of fandom -- there's a ton
of money to be made.
What are cable and satellite providers paying?
Since announcing the network's launch, ESPN and the SEC have
reeled in more TV providers than the doubters expected.
's U-verse, followed by
Fiber. More recently, Cox Cable,
Time Warner Cable
have jumped on board, followed by a handful of smaller companies,
including Bright House Networks and Cable One.
Altogether, these operators will allow the SEC Network to
reach 87 million homes at launch.
Assuming most pass the network's carriage fees on to
customers, wallets everywhere could be squeezed. Estimates vary,
reports that a monthly rate of $1.30 per subscriber
is likely for in-conference providers. The fee is $0.25
in the 39 non-SEC states. Comcast, which reached
a long-term deal with the network last month, is paying a
slightly higher cost of $1.40 per subscriber, the outlet
That rate is about 40% more expensive than what the Big
Ten and Pac-12 networks charge, indicating ESPN and the SEC
appear to be leveraging the conference's popularity. Last year,
it was the top-rated conference on television, and it had seven
of the 10 top-rated teams, according to SB Nation
. The SEC was also the most-watched conference in 2012.
How much money will the SEC and ESPN make?
The network is set to bring in the big bucks. If half of all
households are subject to the in-conference rate, that's a
little over $700 million a year in revenue. The remaining non-SEC
customers should pitch in another $130 million or so. In terms of
sheer carriage revenue, that would be near the size
of ESPN2, and over three times as large as the Big Ten
and Pac-12 networks, Fox Sports estimates
If ad sales and programming costs cancel out -- a fair
assumption -- that leaves $830 million in annual revenue up for
grabs between both sides. While the exact terms of
the ESPN-SEC deal aren't public, a 50-50 split is
says. And in reality, a 60-40 or even 70-30 split in favor
of the SEC isn't out of the question. The conference's
popularity may have created a better negotiating position.
Given these estimates, the SEC's portion of revenue should be
no less than $400 million annually. In that scenario, each of its
14 universities would net an extra $28 million
per year, a truly astounding number, considering the
average SEC school made close to $21
million from 2013's conference payout. If it
holds, that sum -- $49 million -- would be a few million dollars
more than what the Big Ten, Big-12, and Pac-12
expect to pay their schools in the future.
The obvious critique
To some fans, the SEC Network feels like a money grab.
"ESPN and SEC can now siphon content I already had access to onto
a new network I have to pay for. YES," The Big
Lead's Tyler Duffy tweeted sarcastically this week. "The SEC
Network Channel? wait what? I thought ESPN already was the #SEC
NETWORK?," another Twitter user wrote.
This sentiment is understandable. In the past, the
biggest SEC games were already available to the typical viewer. A
dollar or two in carriage fees may not seem like a lot, but
they add up. Division I college football alone is home to 11
individual conferences, and a future with 11
different networks likely won't fly with most fans.
The bottom line
The bigger issue, though, is this: The movement takes more money
from viewers and puts it in the pockets of television networks
and schools, rather than the athletes themselves. The
could be a defining issue of this generation, and evidence
suggests that although players are
worth thousands of dollars
, many face scholarship deficits.
Most likely, the SEC Network will succeed. Over the long run,
fans just need to decide if athletes deserve a piece of that
Your cable company is scared, but you can get rich
While ESPN is enjoying yet another payday, the battle for your
living room is changing the landscape dramatically. You know
cable as we know it is going away. But do you know how to
profit? There's $2.2 trillion out there to be had.
Currently, cable grabs a big piece of it. That won't last. And
when cable falters, three companies are poised to benefit.
for their names. Hint: They're not Netflix, Google, and
SEC Network Launch Means Payday for Schools,
Higher Bills for Consumers
originally appeared on Fool.com.
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