Earlier today we examined the lay of the land in the cable & satellite arena where networks and leagues are battling out with media conglomerates with your sports viewing options and a few dollars at stake. If you missed Part 1, make sure to read it here for what's currently happening in the distribution world, how it effects you, and what's happening in the distressing battles between BTN & Dish Network and NFL Network & Time Warner Cable. Part 2 examines regional networks like Longhorn Network and the Pac 12 Networks that have their fates in the hands of securing carriage.
The Situation: Texas starts the season ranked this year so they are hoping fans will be more up in arms that nobody has the channel compared to last year. Texas' first two games versus Wyoming and New Mexico are on the channel and then after that, some lower quality basketball games are all that's left.
ESPN, who owns the channel, has made revenue guarantees to Texas, but is losing money big time right now on the venture. Texas is taking heat from all sides because nobody gets the channel. Last night, AT&T U-verse finally jumped on board, giving LHN a glimmer of hope and moving it past an audience equal to voters for Craig James. There are rumors of possible deals with Dish and DTV, but nothing confirmed. TWC has the most subscribers in Texas and isn't even at the negotiating table on this one either. A third game is likely to be added to the channel to extend the negotiating window and give leverage to LHN.
What They Are Saying: From The Austin Statesman:
"Dodds also said he thinks ESPN, which owns the LHN and controls distribution rights over a 20-year agreement with Texas, will eventually land a distributor.
"I think they'll get it done," Dodds said."… Obviously not getting it done (before the first two games of the season) is going to impact some people, but it's a 20-year deal. It will be worth it, what we're going through. We're going to win in the end."
Best guess at what the deal is: ESPN is fronting $300 million over 20 years to Texas and right now it looks bleak. In fact, if things don't improve quickly, it wouldn't be too much of a stretch to think ESPN would look at utilizing possible out-clauses in the agreement to dissolve the relationship at some point in 2013 or 2014.
I've already called out how audacious of a concept the channel is and why it won't work, but hey ESPN is fronting the money so it's there problem.
But there is some hope. With the AT&T deal, they can now poach TWC and other customers who don't have LHN. There have been rumors of DTV and Dish going the same route given they could negotiate better deals with their national audiences. I'm not sure the juice is worth the squeeze for TWC, Dish, and DTV given the limited audience for the channel and small amount of compelling programming.
Another thing to consider is all of these companies trying to fight ESPN for stuff like ESPN Goal Line, WATCHESPN, ESPNU, ESPN classic, etc. and this is a nice chip to have in the back pocket when bigger negotiations take place.
Frankly speaking, if nothing else gets done this season, this could be a short lived failed experiment. A first domino has fallen though, so there's a gleam of hope for the fledgling network.
The Situation: ESPN is looking for distribution for their ESPN Goal Line Package and Watch ESPN. They've failed to get ESPN Gameplan in HD, but have made progress with Goal Line and WatchESPN.
Comcast recently closed a big deal to allow their customers access to WatchESPN which is a priority for the company. However, DTV customers among others still don't have access.
Best guess at what the deal is: Most people don't know what ESPN Goal Line is or even have the WatchESPN app. In time, ESPN will get these deals done, but for now people aren't clamoring for it so companies like DTV aren't feeling the pressure to pay the nominal fee to ESPN for access to these items. Watch for ESPN to add more pressure here as they look to pump up WatchESPN over the ESPN3 brand.
The Pac 12 Network
The Situation: Where to start? The Pac 12 brain trust is brilliant. The vision of 1 national network and 6 regional networks is ambitious ….maybe even too ambitious.
Everything about the network in terms of messaging, hiring, branding, etc. is done at an extremely high level. They even have their own oral history at this point touting their "success." That's impressive.
Despite having deals with TWC, Cox, Brighthouse, and Comcast, those deals didn't ensure that all of those subscribers would actually get the channel. So rather than 40 million households spanning those companies, the word is that Pac 12 Networks is only in about 12 million households right now. Basically, only the Pac 12's regional footprint for those companies and other smaller outfits have the channel as of now.
Right now, it's anyone's guess as to what will shake out in the days and week to come. From Jon Wilner's blog:
"There will be no carriage deal this week between the Pac-12 and DirecTV.
The same goes for Charter and Verizon — no deals this week — but there’s still a chance that Dish Network and AT&T will jump on board before kickoff Thursday."
"What happened with the Pac-12 and DirecTV?
According to an industry source, talks were progressing until this week, when DTV apparently decided that there wasn’t enough interest in the Pac-12 games currently scheduled for the national and regional networks. (Telling comment here from a DTV spokesman.)
One source used the word “impasse” when asked about the state of the negotiations.
So if you have DirecTV, Charter or Verizon and want to watch the Pac-12 Networks, then you should seriously consider switching providers.
And if that’s not an option because your provider won’t carry the Pac12Nets — examples: Comcast in Chicago and Washington, D.C./Northern Virginia, where the league has a huge pocket of fans — then, well, I’m not sure what to tell you. Complain, I guess."
What They Are Saying: After weeks and months of the savvy and slick Pac 12 brain trust saying they were confident deals would get done, now it's a bit of panic mode with Pac 12 distribution behind where BTN was when they launched. As DTV backed away from the table, the Pac 12 answered with this letter.
If Dish, AT&T, and Charter back away from the table as well, they will probably get similar treatment too. Essentially the Pac 12 is saying if you don't pull the trigger we're not afraid to go after you despite how wonderful and successful we portray ourselves to the media.
Best guess at what the deal is: Pac 12 Networks has the leverage and they know it. They're anxious to get deals done but the dominoes will fall and likely in the next 30 or so days. This isn't Texas with 3 terrible football games and some basketball mixed in, but a large conference with a lot of quality games spanning football and basketball.
All of the companies are basically like people in a pool seeing who can hold their breath the longest. It's doubtful anyone will drown and everyone is going to get air at some point.
When the games start getting more meaningful or if Dish/ATT cave first, DTV will follow suit. All three of those companies have been at the negotiating table and don't want to piss of the large swath of fans who REALLY want this channel. They are just playing it out, because they might be able to squeeze the Pac 12 a little bit and nobody is knocking the door down for the channel yet with not that many top tier games in the first couple of weeks. That changes when USC plays Cal.
Whenever deals get done with Dish, DTV, ATT, and Verizon, the companies already in the fold like Comcast, Brighthouse, Cox, and Time Warner will then likely turn on the channel in more homes knowing their competition now has the channel which could lead to customer churn.
In the end, unless someone gets backed into the TWC/NFL Network position, the outlook is good. It took BTN about a year to get rolling and I'm guessing the Pac 12 network will stay cool under the collar for a similar timeframe as long as progress is being made along the way. At this point, I think all of the companies know what's coming and are hoping a collective last stand together may earn them better pricing on the channel.
Time Warner Cable Sports Net:
The Situation: Similar to Comcast and DirectTV's Root Sports, Time Warner Cable joins the fray as a cable company launching a regional sports channel. They've lined up the Lakers, Galaxy, and Sparx and with games of those teams, they're looking to bring home a large carriage fee.
At this point in time, DirecTV, Dish Network, AT&T U-Verse, Verizon FiOS, Cox Cable, and Charter all do not have agreements in the LA area with the network launching in October.
Best guess at what the deal is: Trading for Dwight Howard probably is going to play a role in getting the network distributed. I'd imagine a lot of folks will balk at the preseason NBA games and may even tempt fate into the first quarter of the season. UnlikeLHN, we're not talking 2 or 3 shitty football games but rather a full season of NBA games. That's going to be hard to ride out.
Also helping TWCSN cause is this nifty deal they just did with CBS Sports Network. TWC basically decided to carry CBS Sports Network in an extra million homes which helps CBSSN distribution aspirations. In exchange, TWCSN acquires rights to some games spanning schools like UNLV, Fresno State, and San Diego State that will theoretically add leverage to aid their own distribution talks. Frankly, this partnership is probably the only real innovative and value add type of arrangement I've seen.
It may take until 2013, but I'd see the bulk of companies figuring this one out as the Lakers get into their season. They are too popular in LA and people are going to nuts not seeing those games.
People really like football and lots of people get paid a lot of money to fight how the money gets split up between the content providers and the cable/satellite company. It's a played out PR war of attrition and the next couple of days and weeks represent these companies doing their version of the 2 minute drill in a close game. Hopefully these battles wrap up without too much viewing disruption, but that would be asking too much I'd imagine.