A meaningful subplot and, believe it or not, a potential stumbling block to the proposed AT&T purchase of DirecTV involves sporting-event broadcasts.
DirecTV, the satellite provider, has a deal in place in which it pays the NFL about $1 billion annually for the broadcast rights of its games. If DirecTV fails to renew its deal with the NFL, then AT&T could walk away from its $49 billion acquisition attempt.
So football games, not congressional hearings about a possible broadcast monopoly, could ultimately be the undoing of one of the largest proposed telecommunications mergers in our country's history.
This billion-dollar proviso is our latest reminder that big-time sports -- for all the distraction and entertainment they provide outside of the business world -- are big business. It's why college athletic conferences are banking so heavily on securing league-specific TV/broadcast deals, as in the case of the SEC Network, which launches in August.
(By the way, for the purpose of this column the SEC we're referring to is the Southeastern Conference, not the Securities and Exchange Commission.)
SEC member schools like the University of Arkansas are counting on the launch of the channel for a number of reasons. Tens and tens and tens of millions of them, indeed.
So far AT&T and Dish Network are the national carriers who have agreed to terms with the Southeastern Conference. Regional providers (Cox, Comcast, etc.) are still in negotiations, which isn't all that unusual in the cable-rights game.
Side note: An AT&T-DirecTV merger might help some subscribers get the SEC Network, but the deal will take so long to regulate and finalize there is about a zero percent chance that the impact is felt in August 2014.
Assuming additional national and regional carriers come on board, the SEC Network is considered a potential a boon for the conference from an exposure standpoint. Not only will the Southeastern Conference be able to broadcast more events, its partnership with ESPN will allow for millions of additional eyes and ears. More than 1,000 live SEC events are scheduled for broadcast either on TV or online in 2014-15.
Those other major college sports leagues with their own conference-specific broadcast deals are able to televise or stream a significant part of their inventory. So you might have noticed Pac 12 women's tennis or a Big Ten replay of the 2008 Michigan-Purdue football game as options while you scan through the hundreds of channels you have but rarely watch.
And that's a key point in all this. While universities and conferences are touting their increased ability to broadcast everything, they don't necessarily need eyeballs on those events to profit. Those programs exist to fill space until the prime-time shows -- football and basketball -- much in the same way that Judge Joe Brown gives networks something to air until popular comedies and dramas rake in viewers and ad dollars each evening.
There will be ad dollars affiliated with the SEC Network. Believe that.
Major sporting events remain one of the few TV properties drawing live viewers. A distinction between a live viewer or one with a finger glued to fast-forward on the DVR button is an important one to advertisers. They like having a captive audience so their products have a better chance of being seen in real time and not at high speed while the viewer rushes to get to the actual program.
Because live sporting events offer that mostly captive audience, advertisers are investing heavily in them. As a result, the conferences are able to hand out millions of dollars to help subsidize member schools.
A year ago the Big Ten wrote each of its schools a check for more than $25 million, and projections have payouts as high as $44.5 million for each member in the coming years. PAC 12 schools received in the neighborhood of $20 million annually from the conference as part of its broadcast contracts, similar to what the SEC reported last year without its own channel deal in place.
Officials with SEC universities and the conference itself have been tight-lipped on what the payout might look like. Specific dollar figures vary depending on the source, but the consensus is that programs like Arkansas will be handsomely rewarded.
Now the facilities boom on a campus like UA makes a little more sense. Currently UA has about $70 million in ongoing projects, a staggering number that is potentially made more palatable knowing that a $40 million annual payout is possibly around the corner.
Assuming, of course, the league secures more deals with carriers. Without the carriers, there are fewer eyeballs. Without the eyeballs, there wouldn't figure to be as much value.
Sunday Business on 05/25/2014