Big Ten's TV savvy makes Maryland's move look like a winner, analysts say
Conference network called a model of how to make media money at top schools
University of Maryland football head coach Randy Edsall speaks with members of the media after a news conference annoucing Maryland's decision to join the Big Ten Conference on November 19, 2012 in College Park, Maryland. ((Photo by Patrick McDermott/Getty Images) / November 19, 2012)
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At least, that's what economists and TV executives were saying Monday as the school announced its 2014 departure from the Atlantic Coast Conference, which it had helped charter in 1953.
"TV didn't matter in 1953," said media economist Douglas Gomery, a professor emeritus of journalism at College Park. "In 2013, it's everything."
"Maryland's move isn't only about making more media money," he added. "It's also joining a group of better and more prestigious schools overall -- the Big Ten is a much better set of universities. But the media money is a big part of it, and at the heart of that is the Big Ten having its own TV network."
Here are the numbers various media outlets are citing: The Big Ten Network is guaranteeing each of its member schools a payout of $24 million a year based on its TV and other media contracts, while the ACC, which does not have its own TV network, is paying out about $17 million to each school based on its TV contracts.
"From a purely business standpoint, I don't see any downside for the University of Maryland at all," said John Ourand, media reporter for Sports Business Daily, a national trade publication. "They're going to bring in more money under the Big Ten than they would with the ACC. And the Big Ten has even more upside because their national TV rights deals are going to come up for renewal about a decade before the ACC. So, they're already making more money with the Big Ten, and that's only going to increase."
Ourand, a Maryland graduate, warns that his positive assessment of the deal makes him an "utter pariah" among some of his fellow grads who he believes are looking at it through an "emotional" prism.
"But if you're looking at it from a dollars and cents point of view, there is only one decision to make," he insists.
One way the payout for Big Ten schools will get bigger is from the additions of Maryland and Rutgers, which will enlarge the Big Ten TV footprint in key TV markets.
"It's easy to see the appeal of Rutgers and Maryland to the Big Ten Network -- market number one and market number eight, New York City and Washington, D.C.," says Gomery, scholar in residence at the Library of American Broadcasting in College Park.
"And don't forget Baltimore," Ourand adds of the nation's 26th largest TV market, which seems a lot more important when coupled regionally with Washington.
"I mean, the problem with the ACC is the TV markets the schools are in," Gomery adds. "Tallahassee, what can I say? Miami, OK, pretty good, but not that great. All those North Carolina markets are terrible, tiny. Virginia, UVA, that's not going to do much for you. The ACC was formed in a different world in 1953."
The Big Ten land-grant schools, on the other hand, are generally thought of by successive generations as statewide institutions.
"When people say, 'Oh, the University of Wisconsin only has the market of Madison, Wisconsin, which is a tiny city, that's a total misunderstanding," Gomery says. "They have the market called Wisconsin -- just like the Green Bay Packers."
Beyond that, the Big Ten TV network itself is seen as a model of how to make money in the new millennium for prestige schools.
Founded in 2007, the network was launched as a partnership owned 51 percent by The Big Ten conference and 49 percent by Fox Entertainment.
Today, it reaches an estimated 80 million households through what its website describes as "agreements with more than 300 cable, satellite and telco affiliates in all 50 states and Canada."
Deals are now in place with the largest providers: Comcast, DirecTV, DISH network, Time Warner cable, Cox Communications, Verizon FIOS and others.
The Big Ten Network is already available in Maryland. Baltimore Comcast subscribers can find it on Channels 714 and 715. For DirecTV subscribers, it's Channel 610 and 611. DISH is 439.
But the Big Ten Network has managed to secure deals that allow cable subscribers in Big Ten states to receive the network on either an expanded basic or digital basic level of service. That will be the goal throughout this Maryland-D.C. region region as well.
"In D.C. and Baltimore, the Big Ten Network is now on sports tiers that cost a lot more to get," Ourand says. "And what this will presumably do is take it from that level of service to digital basic. And that means the Big Ten is not only going to get more money in those markets, because they're going to get more subscribers and higher license fees by moving it down, the Big Ten is also going to get a huge piece of recruiting in this area by having a well-run, branded network featured in Baltimore and D.C."
While it is no guarantee, the presence of Rutgers and Maryland is expected to drive revenue on several other fronts as well.
First, with the two large markets represented, the conference should be able to charge more for packages of games it sells to other channels and networks like ESPN, even as it attracts more advertising dollars to its channel. And the Big Ten network channel should ultimately be able to charge carriers more per household to carry its network.
"It's hard to see how this is not a win-win for Maryland and the Big Ten Network," Gomery says.
The network, which is on air 24 hours a day, 365 days a year, televises more than 350 Big Ten events. Each year's schedule includes about 40 football games, 105 regular basketball games, the Big Ten men's basketball tournament, 55 women's basketball games, Big Ten women's basketball tournament and hundreds of other Big Ten sports events.
The network also streams more the 400 events a year online.