* The Pac-12 Hotline newsletter is published each Monday-Wednesday-Friday during the college sports season (and twice-a-week in the summer). This edition, from March 29, has been made available in archived form …
Just as the Pac-12 doubled down on its strategy by rejecting ESPN’s offer to take over distribution of the networks, the Hotline is doubling down on the Pac-12’s double down.
In other words, let’s take a second swing through the situation first addressed in this space on Wednesday.
Because it’s complicated. And important. And fascinating.
In the past 48 hours, I’ve collected a bit more information on, and a better understanding of, ESPN’s offer. So this is part-flushing out, part-clarification, part-correction.
We don’t have the financial details of the proposal ESPN put forth last fall. In that regard, commentary on the topic (here or elsewhere) is guesswork.
We we do know is this:
• ESPN offered to take over of Pac-12 Networks distribution, which is the networks’ greatest hurdle but also not the same as taking actual ownership of the company. (My apologies for the conflation; I wasn’t precise enough in the explanation.)
• The Pac-12 Networks would have been on DirecTV.
• ESPN also offered, according to SportsBusiness Journal reporters John Ourand and Michael Smith, to extend “its rights fee agreement with the conference well into the 2030s.”
We’ll assume that means a long contract for distribution of the Pac-12 Networks and an extension of the Tier 1 broadcast rights — ESPN’s allotment of 22 premium football and select men’s basketball games, for which it’s currently paying $1.5 billion over 12 years.
My reading of the SBJ’s story on the proposal is that the Pac-12 would have been left with the following when its media rights negotiations begin in a few years:
The 22 football and select men’s basketball games on FOX and FS1, and ownership of, but not the distributions rights to, the inventory available on the Pac-12 Networks.
Everything else would have been locked into the long-term deal with ESPN, which could have gone to 2030 or 2039 or something in between.
Nor do we know the terms of the rights deal itself, with the annual escalator, and how it would have compared to the current agreement.
(According to the existing term sheet, the Pac-12 is scheduled to receive $321 million from ESPN and Fox in 2023-24, the final year of the contract. I’m not sure the split is exactly 50-50, but if so, that would be $160.5 million from ESPN.)
Now that we have a better understanding of the scope of ESPN’s offer … the Hotline’s option doesn’t change one iota. Pac-12 commissioner Larry Scott and the CEOs were correct to pass on the deal.
In fact, I’m even more convinced of that strategy when the Tier 1 rights extension is baked into the equation.
The offer would have left the conference with far less content to sell in a few years, when the marketplace — both the value of the rights and the number of bidders — should be greater than today. Too much would have been removed from the table, or too little would have been left on it.
(The Hotline remains skeptical of the long-term market for 75 percent of the content on the Pac-12 Networks. That’s a big part of the current problem, after all: too many events, at too great a cost, for too little audience).
Additionally, the move would have contradicted the virtues extolled (for seven years) by commissioner Larry Scott and the presidents/chancellors about the benefits of full content ownership and distribution control for the next round of negotiations.
ESPN’s executives surely weren’t trying to shake down the Pac-12; they are partners today and for several more years … and possible many years after that.
But ESPN isn’t ESPN because it makes bad deals on college sports.
Given the rate of change in the media world and the ever-increasing demand for live sports, the Pac-12 is better off with its full content arsenal available a few years from now. Even if it means more pain in the interim. — Jon Wilner
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• After reports surfaced Wednesday afternoon that Washington State had hired Kyle Smith, the Hotline produced an insta-reaction column. There are plenty of reasons to like the move, starting with the fact that Smith has executed impressive rebuilds at two challenging places: Columbia and USF.
• Dana Altman was one of the best Plan B hires in conference history. The Hotline spoke to the man who lured him to Eugene, former Oregon athletic director Pat Kilkenny, about the five-week process that included swings at Tom Izzo, Jamie Dixon and Brad Stevens. “A lot of people could be great head coaches, but they wouldn’t fit in Eugene.”
• ICYMI: The Wednesday newsletter, as noted above, examined the ESPN offer for Pac-12 Networks distribution. Previous editions of the newsletter are available in archived form using the following hashtag:https://www.mercurynews.com/tag/pac-12-hotline-newsletter/
Why we need your support: Like so many other providers of local journalism across the country, the Hotline’s parent website, mercurynews.com, recently moved to a subscription model. A few Hotline stories will remain free each month (as will this newsletter), but for access to all content, you’ll need to subscribe at a rate of just 12 cents per day for 12 months. And thanks for your loyalty.
• It appears Cal has found its coach, a mere five days after spending 10 days deciding whether to fire Wyking Jones. The Bears reportedly will hire Mark Fox, who was dismissed by Georgia a year ago. This is the first major hire for athletic director Jim Knowlton during his limited experience in charge of Division I programs (Air Force and Cal).
• Washington State finalized its deal with Kyle Smith, who signed a six-year agreement to jump start the program. The move was well received by Spokesman-Review columnist John Blanchette: “It smacks, in fact, of sound thinking – something all too rarely exhibited in the Cougars’ various trawls for basketball leadership over the decades. Now, will it work? Reply hazy, try again.”
• Arizona quarterback Khalil Tate returned for his senior season because he has loads to prove to himself, his coaches … and the NFL. “With the circumstances I was dealing with last year, I couldn’t really perform to the best of my ability and show the next level what I can do.”
• Utah linebacker Chase Hansen played at an all-conference level last season despite a herniated disc. (Why does that not surprise me.)
• Three words that mean so much for USC’s new offense: “Find the grass.” If the receivers do that successfully, the touchdowns should follow under playcaller Graham Harrell.
• The keys for Washington this spring? There are eight, according to the Seattle Times’ Mike Vorel. (And no, Jacob Eason doesn’t account for seven of them.)
• Arizona State quarterback Manny Wilkins wasn’t invited to the NFL Combine. His chance to show scouts what he can do came earlier this week, at Pro Day.
April 3: Washington starts spring practice
• Did the Pac-12 make the right move in retaining 100 percent ownership of the Pac-12 Networks back in 2012? Writing for the website AthleticDirectorU, a contributor calling himself The Entertainment Strategy Guy offers a fascinating breakdown of the financial calculation, to a degree the Hotline has never encountered. His methodology includes the Time Value of Money, Net Present Value, Foregone Revenue — don’t let the pseudonym fool you: This is high-level business analysis. Part II will be published next week.
• Colorado and former coach Mike MacIntyre reached a buyout agreement: MacIntyre will receive $7.2 million, and Colorado won’t have to pay him the full $10 million owed, based on the apparent terms of his contract. That $3 million savings is significant for CU’s bottom line; it’s almost enough to pay the coaching staff (assistants and coordinators) for one season.
• Washington State is requesting an additional $500,000 from the Board of Regents, per the Daily Evergreen, the student paper. The reason: New coach Kyle Smith needs a staff, and the cash to support the move wasn’t included in the budget. The Evergreen also reported separately on AD Pat Chun’s comments during a panel discussion: “We have a plan that doesn’t take one iota away from our path to solvency.”
• Oregon went the final four minutes without a field goal in its Sweet 16 loss to Virginia. Dana Altman took the blame, but his players took some bad shots.
• It was difficult to watch, writes the Oregonian’s John Canzano: “One shining migraine.”
• The Hotline expects Ducks freshman Louis King to be a one-and-done, but junior point guard Payton Pritchard sounds open to exploring his NBA options, too.
• No surprise here: UCLA’s leading scorer, wing Kris Wilkes, has played his final game in Pauley. Wilkes figures to be a late first-round pick.
• Colorado’s postseason run ended in the NIT quarterfinals, but the Buffs are well stocked for next season: All the key players are expected back, led by McKinley Wright and Tyler Bey.
• What Washington loses in experience, it should gain next season in size and length: “We could hold hands sideline to sideline,” coach Mike Hopkins said.
• The NCAA Tournament is loaded with teams immersed in scandal, yet viewership data is strong. Maybe fans don’t care that players are getting paid under the table, writes Yahoo’s Pat Forde, which says something about how fans might feel about players getting paid above the table.
A section devoted to content on Pac-12 Olympic sports.
• The Pac-12 has one-two-three-four-FIVE teams in the Sweet 16 of the women’s tournament, with four of them on the court today. Here’s a breakdown from analyst Michelle Smith.
• All-conference guard Mikayla Pivec willed Oregon State through the opening weekend.
• UCLA takes on mighty UConn tonight in the Sweet 16.
• Oregon basketball seen through the Sabally sisters, who “will give coach Kelly Graves an imposing Berlin wall to throw at the Pac-12,” writes the Register-Guard’s Ryan Thorburn.
• A look at the deep and lasting popularity of Arizona’s softball program at the ‘Rita’.
• Sam Ferri, a sophomore catcher recovering from multiple injuries, is the unexpected force behind Arizona State’s improvement.
What’s coming on the Pac-12 Hotline:
• ‘Saturday Night Five’ is tentatively scheduled for its normal slot, despite the absence of Pac-12 teams in the NCAAs this weekend. We’ll also assess Cal’s coaching hire, if and when it gets done (quite likely with Mark Fox). Depending on the timing, those columns might be combined.
• The Hotline’s new football recruiting column, on hiatus during the NCAAs, returns next week. Our topic: Oregon coach Mario Cristobal, who has brought an SEC level of fervor to the west coast.
• One year ago, the Pac-12 Networks revamped their strategy for engagement, smartly increasing their focus on football. How did it turn out? We’ll take a look.
*** Follow me on Twitter: @WilnerHotline
*** Pac-12 Hotline is not endorsed or sponsored by the Pac-12 Conference, and the views expressed herein do not necessarily reflect the views of the Conference.
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