A Brave New (FOX) World
Yesterday’s announcement that Rupert Murdoch is launching another national sports network, FOX Sports World 1, may very well impact Northwestern, indirectly.
I’m curious how many of you eye rolled when you read the news that Rupert Murdoch was launching FOX Sports World 1. “Yet, another “national” sports network? Why do we need that?” you may have wondered. It’s a good question. Perhaps the better question for this audience is “what does it have to do with Northwestern?”
First, some background. In the past few years, the great sports cable race has ensued. Two well-known network entities, NBC and CBS have launched and or rebranded existing cable nets (Versus and CSTV) with their brand names to add a sports cable channel to their sales portfolio. As many of you know, the “cable model” is predicated on networks getting a dollar amount per subscriber per household per month. It’s the backbone of the financial model, and it is extremely lucrative, if you can convince said cable operators to pay it. BTN (Big Ten Network), for example, gets approximately $1.10 per subscriber within the “footprint”, an industry word that means within the territories that are within the Big Ten geographical areas. Outside of the footprint (ex – Houston or LA or San Francisco etc…) they get about $.10. They’re in 53 million homes and with Maryland and Rutgers, that number is expected to jump big time in 2014 and beyond. Simply put, Jim Delany has said expansion is following the burgeoning demographic areas of the next 20-50 years, and the distribution and expansion of BTN is a key driver in these conversations. For comparison’s sake, $5.10 of your cable or satellite bill goes directly to ESPN, which is in 98 million homes. You don’t need to be a math whiz to know that’s a ton of dough before dollar one of advertising and other revenue streams even start.
It is also the basis for the large rights fees that ESPN doles out for blue chip properties like the NFL, MLB, NCAA and of course, the Big Ten Conference. Live sports are the holy grail of television advertising because they are the most DVR-proof television out there and they have a highly coveted demographic. ESPN has leverage because they have the sports rights to the things that, if a cable operator tried to boycott, would cause revolts, pitchforks and all. Northwestern directly benefits from this complicated matrix already. The last deal Jim Delany cut was a 10-year, $1 billion rights fee deal to ESPN. The incredible case study of a success that is the launch of BTN came with FOX backing the 20-year guaranteed payout to each school, which started at about $6 million per year per school and has escalators each year. Plus NU gets a cut of the profits (FOX and Big Ten Conference own roughly 50% each and therefore split profits) indirectly through it’s Big Ten payout. BTN also pays a rights fee to the Big Ten Conference, just like ESPN does (but a much smaller number). All told, these are the economic forces that combine to give Northwestern a mid $20 million per year check from the Big Ten. These are the economic forces behind the projected $43 million payout to Northwestern (and each of the B1G schools) in 2017 when the still-to-be-cut deal by Jim Delany and ESPN goes in to effect.
Enter FOX Sports World 1. Their initial announcement revealed they will be leveraging FOX’s rights to things like MLB, NASCAR, UFC and…here is where it gets interesting…Pac12, Big12 and the NEW Big East/Catholic League and old Big East (or is it the other way around)? Simply put, a new “buyer” just entered the market for Jim Delany. While I may not have been an economics ace at NU, the more buyers you have for your coveted product, the more leverage you have as a seller. With the Big Ten brand continuing to increase in value, you can envision a rather interesting negotiation coming down the pike. All of this is dependent upon FOX Sports World 1 (there is a FOX Sports World 2 – think ESPN2 – that is being created by converting the niche network FUEL) converting as many of the 83 million SPEED subscribers as possible. Think about the head start this network would have if it can convert most of them. And command the $.75-$1 price point. Wow.
Most of the articles on this launch talked about the fact this could be one of the first real attempts to take on ESPN that has a legitimate shot to at least make a dent. ESPN skipper, John Skipper, even threw out a platitude towards FOX, acknowledging they have the resources to throwdown. Just ask CNN about the impact FOX has had in the news landscape. This isn’t the first rodeo, either. I actually worked for Fox Sports Net back in the mid 1990s when FOX made its first attempt, albeit by stringing together the then patchwork regional sports network model and hiring former SportsCenter icons Keith Olberman and Chris Meyers to anchor the nightly national sports news show on FSN. It failed. This, however is different. The ability to get past that 60-70 million homes mark to truly be taken seriously by cable operators and advertisers as a “national” entity (a perception BTN still fights in its ad deals as they are perceived as national and don’t have national ratings that make it easy to buy from the media buyers’ perspective) is really intriguing here, because they have an incumbent, SPEED Channel, with 81 million subscribers and I think the average sports fan would say MLB, NASCAR, UFC and Pac 12 and Big 12 football/basketball along with the new Big East is of greater value to the consumer.
There is a downside to this for Wildcat fans, and it could be a big one. Recruiting. If you get any alone time with Pat Fitzgerald and ask him the single most impactful thing for Northwestern during his tenure he’ll answer “no question, BTN”. He’ll tell you it is one of the reasons we are killing it in places like Houston. Kids are playing Friday nights and getting up on Saturday with a chance to watch us every single week. He’s heard from the players across the country, not just in the footprint, how they have access to all our games and it helps them track us and create a connection. While other B1G schools can say the same, that isn’t the case for any other league. Think about how hard it is to find Stanford games and they are the easiest of the non B1G competitive set to find. Vanderbilt, Boston College, Duke – all buried. Even now that we compete with a whole new set of competitors ranging from Cincinnati to West Virginia to Oklahoma and many that litter the Top 20. Advantage B1G and Northwestern as far as access to the product.
The Pac12 and Big12 stand to gain a ton from this deal and likely erode this huge competitive advantage we’ve had. I believe this is something that really could be a competitive threat. It’s all the more reason why we need to build off of a 10-win season, so that we become more desirable by the truly national network, ESPN and its seemingly subsidiary over the air (OTA in TV speak) network, ABC Sports.
On one hand, this deal sets up nicely for even more money in the coffers for Northwestern via its B1G membership check. On the other hand, a huge competitive advantage with the BTN may very well take a hit as other leagues have access to a lot more games. The day is coming when every major conference game will be accessible on one of the networks every week.
The ‘Cats had an early practice yesterday and based on multiple reports filed by PurpleWildcats.com’s Nick Medline and WildcatReport.com’s Larry Watts, Rashad Lawrence is turning heads with some great hands so far this season. Kain Colter had a reported tough day with his accuracy and Fitz was none too pleased with the energy at the start of practice. Other than that, Rob Coons of NUSports.com filed this insightful and well-produced feature on the much discussed offensive line:
LTP Purple Pledge – Season Ticket Drive – Shoutout Time!
Yesterday we announced the start of our fifth annual Northwestern football season ticket drive, aka “The LTP Purple Pledge”. Man, have you responded. We’re counting NEW season tickets only on our quest to help set the all-time Northwestern season ticket record in 2013. Stephen S. upped his four season tickets to six, and is invoking the bundling technique to get us to 22. Frank M. invoked this strategy again, and has gone from eight season tickets to ten to get us to 24. AlumDad went from four to six to get us to 26. And finally, Mark from Toledo increased his season ticket count by two to get us to 28! At this rate, we’ll be at 20% of goal by the weekend. Let’s keep it going. Simply click the link on the sidebar to order tickets or call 888-Go-PURPLE, purchase your tickets and then email us at email@example.com and we’ll give you a shoutout!
Purple Mafia Profile Link
Willie Weinbaum, a diehard ‘Cats fan and Purple Mafia Profilee posted this fascinating and sobering story as part of ESPN’s Outside the Lines series. With a seemingly massive increase in court storming this college basketball season, Weinbaum profiled 27-year-old Joe Kay, a former standout Stanford-bound star athlete whose life was forever changed by one such incident in high shcool. Great piece Willie!
Lacrosse Home Opener
It’s another day and another mushy, post snow pounded city here in Chicago. Just the recipe for the ‘Cats women’s lacrosse home opener at Lakeside Field vs Boston College at 5pm ct. The Ryan Fieldhouse, which will enable the ‘Cats to play indoors on days like today, can’t get here quick enough!