Conference realignment rumors constant as TV money rises
Mar 05, 2013 (Richmond Times-Dispatch - McClatchy-Tribune Information Services via COMTEX) --
CHARLOTTESVILLE -- On Sunday, Nov. 18, word began to trickle out that the University of Maryland would leave the ACC for the Big Ten.
The next morning, Virginia athletics director Craig Littlepage addressed the coaches in his department.
"This is a disturbing situation to say the least, and is a head-scratcher for many involved in college athletics," he wrote in an e-mail, a copy of which was obtained by the Times-Dispatch.
In another e-mail later that afternoon, Littlepage wrote: "Personally, I am hard-pressed to give you concrete reasons for MD to make a move to the Big Ten."
In the e-mails, he did not sound like someone who was considering following the Terrapins.
Yet ever since that day, various internet sites and message boards have floated the rumor of the ACC's demise. Washington TV station WUSA even issued a report that U.Va. would join the Big Ten, citing Dec. 1, 2012 as the date the press conference would be held.
Littlepage has firmly denied all those reports, and the events of the past four months have validated his stance.
The conversation is unlikely to go away, though, as television money gets richer and more competitors enter the crowded playing field.
Today marks another milestone, as the Fox television group announces the summer launch of its new all-sports cable channel, Fox Sports 1.
Sports are the hottest property on television right now, and a seemingly endless source of income for everyone involved. In the age of DVRs, sports are still mostly watched live, and provide the dependable, young and mostly male audiences that advertisers crave.
At the collegiate level, the revenue generated by television broadcasts now far exceeds ticket sales.
"Everyone thinks you make your money in the seats," Maryland president Wallace Loh said in November. "You make it in eyeballs on a screen."
As TV networks pay more to broadcast sporting events, those costs get passed along to cable subscribers.
ESPN is the leader in the field, charging cable companies $4.69 a month to carry its channels, according to research firm SNL Kagan.
But the others are getting their share of the pie, too, from the NBC Sports Network on down to the Speed Channel, which gets 22 cents a month per cable subscriber -- whether you watch it or not.
Those revenues make up the bulk of the profit, and explain why the Big Ten was so interested in adding Maryland and Rutgers.
A cable system that wishes to acquire the Big Ten Network pays a reported 7 cents per month per subscriber. In markets that have a Big Ten team, that amount goes up to $1.25 per month.
If the cable providers in Washington and New Jersey all picked up the channel, the revenue bump in the Big Ten would be gigantic. However, those providers are growing weary of raising rates every time a new network comes along -- particularly for one that only has niche interest.
A Comcast representative declined to comment, citing ongoing negotiations. A Verizon spokesman did not return phone calls.
Verizon, however, has announced it will raise rates by $2.42 monthly for subscribers who receive sports networks. That will be phased in starting this April.
The ACC is currently exploring starting its own network, though no concrete plans have been laid.
With the rights fees and cable fess doubling every few years, it's natural to wonder how sustainable the growth is. If there's an end in sight, nobody is willing to admit it.
"I don't think it's a bubble, I think it reflects the value of the programming," NBA executive vice president Bill Koenig told SportsBusiness Journal.
Disney CEO Bob Iger, who lists ESPN as one of his top moneymakers, was on CNBC last week and said he expects rates to continue to rise.
Those increases will fuel more rumors about conference realignment, as the pie grows larger for everybody involved.
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