Making a bundle

With the rollout of the SEC Network tomorrow, I wonder if one of Slive’s underlings has shown the boss man this timely piece in the New York Times about threats to the current television broadcast model.

Television has thrived on this kind of systematic stacking, but though bundles may be a handy way of protecting things, they also tend to obscure the weaknesses within. Those flaws are becoming more apparent as the practice of bundling comes under attack.

Things aren’t breaking down tomorrow.  And the SEC isn’t in bad shape per se, because it’s got product that lots of people want to watch.

Producers of content can put distributors and programmers over a barrel because the public has an expectation of what will be there when they turn on their televisions. Programming like the Olympics, the Oscars and the National Football League are all seen as almost inalienable viewing rights.

But fissures are appearing and the status quo isn’t sustainable over the medium-term.

Susan Crawford, a professor at the Benjamin N. Cardozo School of Law and the author of “Captive Audience,” says she thinks television bundles will be with us for a while — six to eight years — regardless of what the consumer wants.

“It’s like the picked-on kid who tries to get home to his front porch; he has to make it past all the bullies first,” she said. “We have a heavily defended, heavily concentrated programming industry and a monopoly in distribution, with none of the big players willing to act like a maverick. No one wants to break ranks because the current system has been so lucrative.”

What you don’t want is to be locked into an arrangement that eventually reflects a defunct marketing strategy.  SEC football may be just as valuable ten years from now, but in a universe where consumers can skip advertising during games, TV broadcast rights/revenue generation may not turn out to be what you expect in the present.  David Carr uses the Masters as an example of how that might play out.

Then again, some of the big attractions on network television are becoming content providers themselves. Like many Americans, I spent this weekend watching the fight to wear a green jacket at the Masters. But a funny thing happened on the way to the clubhouse at Augusta, Ga.: I took a detour. The Masters app, which let me omnisciently check the leader board, scan for my own highlights and toggle between specific groups or holes, sucked me in.

The second screen experience slowly replaced the first — I barely looked up at the television. CBS’s reverent, almost whispered coverage took a back seat as I programmed my version of the Masters. The function that would have allowed me to throw the Internet coverage to my big-screen television was not enabled, but that’s only a matter of time. Change often comes very slowly, but then happens all at once.

CBS paid dearly for rights to the Masters, marketers ponied up to advertise in limited spots and my cable provider paid a hefty toll in terms of retransmission fees, but there I was, staring at the device on my lap, looking at a bright future — no cable, no commercials, no bundle required.

Sounds promising.  Except there’s one difference between the Masters and the SEC.

The conference also gained control of its digital and sponsorship rights that will be rolled over to ESPN as well. That will enable ESPN to have TV, digital and sponsorship rights for the conference under one umbrella. Being able to package TV and digital advertising in corporate sponsorship deals is considered a vital revenue component, and neither the conference nor ESPN wanted multiple partners selling those rights in the marketplace.

It’s hard to say that hitching the SEC’s wagon to ESPN is a bad strategy.  But nobody knows how smart that will look ten years from now, either.

About these ads

13 Comments

Filed under SEC Football

13 responses to “Making a bundle

  1. paul

    The Internet feeds are relatively ad free at the moment only because not too many are watching online. Don’t expect that to last long. As more and more of us opt out of cable for Netflix, Hulu and the like more and more advertising dollars will flow towards those media. Content providers will not turn their money down.

    • Cojones

      And how many umpteen millions will be had while using SEC CFB as a digital bellcow to end the internet freebies for everything forever? Is the reward for individual schools in the SEC worthy of helping to plow the free part of the internet asunder?

      Once again we have identified the enemy. It be us.

  2. So the oligarchy entrusted with stewardship of the sport we love has been chasing money like a Robber Baron in the roaring 20′s and, as is well-documented on this blog, has sacrificed several of the things that make it our favorite sport in the first place. Meanwhile, the O’Bannon suit threatens to divide those almighty dollars into smaller pieces and the bundled-content broadcast model of TV appears headed to extinction, which will predictably lead to the pie itself being smaller.

    Once we’re on the other side of whatever the new broadcast model will be, I wonder if all those things Emmert & Co. sacrificed in the pursuit of a shrunken piece of a shrunken pie will seem worth it. It feels like we’re headed towards the inevitable bursting of something that will be in hindsight be called a “bubble”. Senator, I’ll admit that when you started beating the drum on this stuff I thought you were being reactionary. Now I realize – sadly – that you were being prescient. As a loyal reader I thank you for the coverage you have been giving these issues.

  3. Dog in Fla

    With our insiders (one of whom is Chucklin all the time) “hitching the SEC’s wagon to ESPN” is as easy as taking food from a baby

    http://www.sportsbusinessdaily.com/Daily/Issues/2008/03/Issue-127/Sports-Industrialists/Espns-Chuck-Gerber-Leaving-Net-To-Be-Consultant-For-SEC.aspx

    http://m.sportsbusinessdaily.com/Journal/Issues/2012/02/27/Colleges/BCS.aspx

    “The conference paid $2.2 million to its TV consultant, California-based Chucklin, Inc., up from $400,000 in 2010-11. The firm, which is led by former ESPN executive Chuck Gerber, received $2 million in 2008-09 the last time the SEC went through TV negotiations.”

    http://www.al.com/sports/index.ssf/2013/01/sec_commissioner_mike_slive_re.html

  4. WarD Eagle

    tl;dr…but you have to remember that a huge chunk of cable income is the bundling of the ESPNs.

    If they disintegrate the providers, ESPN will take a hit, but nothing compared to what will happen to other providers. I’m pretty sure I’m not going to call up directv and ask them to include A&E.

    ESPN would likely be able to charge a $10-25/month fee. Many of us will pay that to watch SEC football, esp. relative to the current PPV costs.

    • Dog in Fla

      “I’m pretty sure I’m not going to call up directv and ask them to include A&E.”

      According to this sexy-voiced A&E lady, if you’re not watching, you should be

  5. Macallanlover

    It may take 6-8 years for the changes to fully evolve but given the momentum I have seen in the past 6-9 months I think the impact will cause major changes much sooner. When you get hit with a cable bill for $125-150 per month, that is twelve reminders a year that you don’t need all the progamming you are being charged for. When old farts like me can understand the technological options that are available now, and that will be broadened significantly by some very well-heeled tecnological giants in the next few months, what is going to justify 6-8 years? The rats will be fleeing the sinking ship at a much faster rate with each month.

    I saw some numbers this past week on the recent jump in the rates of what are called “Zero TV” homes just the past few months. (Zero TV doesn’t mean the home doesn’t have a TV available, just that the home does not receive a signal from any of “traditional” methods, including an antennae or rabbit ears.) For every person that adopts this new way of watching their box, there are several people in that person’s social circle that are being exposed to this alternative for the first time. Cable and satellite companies will have to begin tweaking their packages within the next 1-2 years, imo. The rising tsunami will cause a major furor, and could result in a re-writing of contracts before the 5 year mark.

  6. Connor

    When you throw in the O’Bannon case, the large scale pressure higher education is under, the rapidly changing nature of the football post-season and the inevitable trickle down the concussion issue will have, it’s hard to imagine college football not changing dramatically in the coming decade or two. God only knows what changes, though. Should be a hell of a ride.

    • Dog in Fla

      “When you throw in the O’Bannon case, the large scale pressure higher education is under, the rapidly changing nature of the football post-season and the inevitable trickle down the concussion issue will have,” it’s just another day at the office for Emmert.