Buzz in LA Monday

[ChicosBailBonds]

Albeit its small, but the thought that some 60 year old woman retiree from California living in Hawaii pays $0.72 a year to the Big Ten each year is almost comical.  I know Chicos says a la carte will be bad for many people but it just doesn't seem right to me (not just channels like BTN).  However, I don't think its right the people who could give a S^^^ about sports have to pay for it.

That's why most sports are on sports tiers to try and avoid that hit to customers (of course, the sports channels scream bloody murder and that can lead to all kinds of fun).  Look at it this way, Congress has said for years they want a la carte pricing but when they truly sit down and understand the ramifications they back off each time.

They don't want to be responsible for killing about 100 channels as a result of a la carte.  While they would create "choice", the would reduce choice at the exact same time because the smaller channels could not survive.

[ChicosBailBonds]

Even if assuming the numbers are correct, doubt that the Big11 Network woul get anywhere near the larger number....?

I believe those numbers are low which is why I asked.  There are different tiers that MSO's pay, as Indee correctly points out.  An operator in Florida isn't going to pay the rack rate of a MSO in East Lansing.

That being said, those numbers don't look right based on all the data I've seen.  That's why I'm curious if it was in an article or some analyst taking a wild guess, etc.

[mugrad99]

I'll look for more...

http://www.annarbor.com/sports/um-football/big-ten-could-make-a-big-splash-with-expansion/

[ChicosBailBonds]

I'll look for more...

http://www.annarbor.com/sports/um-football/big-ten-could-make-a-big-splash-with-expansion/

Thanks...yes, looks like an analyst (Kagan in this instance) is making that assumption.  It looks like they are using a blended avg for that pricing estimate.  The $0.06 is probably pretty close, it's the $0.88 that I'm having trouble reconciling in the 8 state Big Ten area.  I believe that amount is understated.

[MarquetteDano]

That's why most sports are on sports tiers to try and avoid that hit to customers (of course, the sports channels scream bloody murder and that can lead to all kinds of fun).  Look at it this way, Congress has said for years they want a la carte pricing but when they truly sit down and understand the ramifications they back off each time.

They don't want to be responsible for killing about 100 channels as a result of a la carte.  While they would create "choice", the would reduce choice at the exact same time because the smaller channels could not survive.

Definitely against government forcing a la carte pricing via laws.  If the market demands it, it will happen.  If people don't demand it economically, then it shouldn't happen.

[ChicosBailBonds]

I'll look for more...

http://www.annarbor.com/sports/um-football/big-ten-could-make-a-big-splash-with-expansion/

After more investigation, the numbers are actually very close.  MFNs were triggered after the cable guys finally bought in which I had forgotten about.  Once those MFNs kicked in, those numbers are actually a little HIGH, but not by much.  That will give you an idea of what a BEN would be, which is less than the BTN in terms of carriage.

[ChicosBailBonds]

Definitely against government forcing a la carte pricing via laws.  If the market demands it, it will happen.  If people don't demand it economically, then it shouldn't happen.

There is a new service that is trying it, but on a very limited scale.  They let you create your own package but they only have about 50 channels to choose from.  It will be interesting to see if they gain any traction.  So while they offer choice, it's so limited that for all intent and purposes, they really aren't offering any choice at all.

[Litehouse]

I'm curious about the actual subscriber fees and numbers of subscribers also.  Here's an article on Echostar/Dish signing up for $1 in the Big Ten region, $0.10 everywhere else.
http://www.sportsbusinessdaily.com/article/114766

A poster on an Iowa State message board did a fairly comprehensive summary of all the various deals.  Some at $1, some at $0.70, DirecTV and Dish at $0.10.
http://www.cyclonefanatic.com/forum/state-rivals/58162-big-ten-network-revenue.html

[ChicosBailBonds]

I'm curious about the actual subscriber fees and numbers of subscribers also.  Here's an article on Echostar/Dish signing up for $1 in the Big Ten region, $0.10 everywhere else.
http://www.sportsbusinessdaily.com/article/114766

A poster on an Iowa State message board did a fairly comprehensive summary of all the various deals.  Some at $1, some at $0.70, DirecTV and Dish at $0.10.
http://www.cyclonefanatic.com/forum/state-rivals/58162-big-ten-network-revenue.html

Yes, but as I mentioned above, MFNs kick in which right size the contracts for others.  As an example, someone pays $1.20 for in market and $0.15 for out of market.  But 2 months later, a large cable company gets a better deal at $1.00 and $0.12.  The MFN  (Most Favored Nation clause) kicks in and readjusts the original deal by the first MSO down.

Now, you can imagine that programmers despise MFNs and MSOs (the distributors) love them.  They provide protection to the MSOs.    MFNs do not exist in all contracts, they are negotiated for.

An interesting dance to be sure.

[Litehouse]

All of these numbers make me skeptical of the reported $22M each school is getting.  For a back-of-the-napkin calculation, assuming $1/month per subscriber (is probably high based on these numbers), and the BTN website reports 40M subscribers.

40M x $1/subscriber/month x 12 months = $480 Million

$480M / 2 = $240 Million  (since it's half owned by Fox and the Big Ten)

$240 M / 11 schools = $21.8 Million per school

These numbers are estimated on the high side ($1/subscriber/month) and don't include any expenses or advertising revenue.  I can't imagine advertising revenue is that much, since 90% of the commercials on the BTN are infomercials for the schools.  The costs involved with starting and running an entire network, producing games, etc. have to be substantial, which would significantly eat into profits.

If you drop the ammount/subscriber to $0.70/month, which was reported in some of the deals, then it drops to $15.27 Million per school, which is still excluding expenses and advertising revenue.  That's still a lot of money, but not the $22M they're talking about.

Also, I don't know how they calculate the 40 Million subscribers.  I added all the DMA's in the Big Ten states and came up with about 28 Million (that includes Philadelphia and St. Louis).
http://www.tvb.org/rcentral/markettrack/us_hh_by_dma.asp
So maybe they get $1/subscriber for those 28 Million and $0.10 for the other 12 Million

28M x $1/subscriber/month x 12 months = $336 Million
12M x $0.10 x 12 = $14 Million

$350M / 2 = $175 Million  (since it's half owned by Fox and the Big Ten)

$175 M / 11 schools = $15.9 Million per school (not including any expenses or advertising)

Again, $15.9M is still a lot of money, but not $22M.

[GOO]

I think the total TV package is around 22M per team (ESPN, BTN, CBS, etc; and this may include radio and some other revenue, not sure).  The BTN adds somewhere around 9 million or so per school, or at least that is what I read from one of the more credible articles that I came across a few weeks ago.  The 22M is total, and part of the 22M is the BTN. 
Just repeating what I've read from someone who seemed to actually have a handle on this, but I can't find the article now.