TV sources assess Pac-12 media proposal as 'Rearranging deck chairs on the Titanic'

As Arizona President Robert Robbins assesses the Pac-12 Conference’s media rights proposal – which primarily entails a majority streaming deal with Apple TV+ – two key questions will need to be addressed:

• How substantially would a heavy streaming deal cut into the visibility and exposure of the Pac-12’s brand? Long-entrenched Pac-12 fans are still tethered to linear TV networks, which offer broader reach and incessant promotion of league inventory.

• Plus, what level of risk would schools be assuming by entering into a pact with subscription-based financial incentives? ESPN’s Pete Thamel reported that element was central to the proposal that Pac-12 Commissioner George Kliavkoff unveiled to members Tuesday.

“If the Pac-12 had a better linear [network] offer – in terms of cash and distribution – they would not be considering Apple,” Neal Pilson, the former longtime CBS Sports president, told On3 on Wednesday. “Half the remaining Pac-12 schools will probably move to the Big Ten and the Big 12, which means the end of the Pac-12. So, we are talking about rearranging the deck chairs on the Titanic.”

Uncertainty continues to mount, especially in light of Yahoo! Sports’ Dan Wetzel’s report that Big Ten presidents have begun discussions surrounding the possible addition of Oregon and Washington. The conference is not trying to appear predatory but is doing due diligence. The Big Ten could add Stanford and Cal if the Pac-12 fully collapses.

It’s becoming increasingly clear Kliavkoff’s chances of pulling together the Pac-9 is weakening.

Pac-12’s Apple TV+ option generates questions

The Apple TV+ deal was likely the most attractive deal presented to university presidents. But there are no guarantees that subscriptions will increase enough to yield $31.7 million annually for each member, which is what each full-share Big 12 member will receive.

It is unclear whether a linear network – ESPN or FOX Sports? – would have a smaller slice of the inventory pie in the Apple TV+ deal.

Would Apple sublicense some inventory to ESPN?

Are Apple and ESPN destined to be strategic partners?

What would be the baseline annual revenue share for Pac-12 members?

Also unclear is the level of appeal of other deals broached that may have included a linear component but were underwhelming on the financial side. 

Stakeholders must weigh trying to maximize dollars and visibility. At the moment, the Pac-12’s options seem to fall short in both regards.

Pilson said influential alumni of Pac-12 schools are typically wedded to the convenience of linear TV, even as the nationwide cord-cutting trend escalates. That platform also affords fans the chance to casually stumble upon Pac-12 games. Conversely, fans will have to actively seek out Pac-12 coverage on Apple TV+, which had some 25 million subscribers as of last year.

Pilson estimated that the audience loss with a shift to a majority streaming deal would be about 50%.

‘Over 50% streaming? No, I don’t think so.’

Arizona is the lynchpin in the Pac-12 survival equation.

If the Wildcats commit to the league and its deal, the league could stabilize and immediately pivot to expansion. If the Wildcats follow Colorado and jump to the Big 12, it could hasten the unraveling of the league, with other Four Corner schools Utah and Arizona State perhaps following Arizona in lockstep.

A Big 12 source with direct knowledge of the league’s expansion strategy told On3 that the league has identified 14 as the “right” number of schools but the source added that the league would pursue more during this realignment cycle if they were advantageous additions.

Robbins himself told Dennis Dodd of CBS Sports in recent months that he was uncomfortable with a rights deal that did not land at least 50% of the league’s inventory on linear TV. With the Apple TV+ proposal, the percentage of inventory on linear TV would likely be much less than 50%.

“[You hear talk] it is going to be all streaming,” Robbins said in the report. “Nobody is going for that. Over 50%? No, I don’t think so. I think that is too much. It is Ok if it is 50-50.”

Streaming is a ‘hard sell’ to university presidents

Another veteran TV source told On3 on Wednesday that he suspects the majority streaming package would indeed be accompanied by linear coverage – perhaps side by side – for the biggest Pac-12 games. ESPN, he ballparked, may be attracting some 800,000 to 1 million people watching the Pac-12 in West Coast prime time.

“You’re not going to match that by streaming alone today,” the source said. “As cable continues to shrink and streaming grows, the delta will lessen in the years ahead. College football coaches, presidents, alums are older and more conservative. So streaming is a hard sell. You can’t easily ‘switch channels’ so it’s less likely that viewers will happen upon a game. This all impacts recruiting.”

For months, the Pac-12 privately maintained confidence that it could ultimately deliver in the ballpark of $31.7 million in rights revenue for members. With the Apple TV+ deal, that is possible. But it’s also possible that the annual revenue could fall well below that figure.

In short, media rights experts say it is a significant risk for members, especially those like Arizona with options.

Depending on a subscription model is risky

Hitching much of your rights revenue expectation to a subscription-based incentive structure comes with its own risk factor.

Characterizing that specific risk as “very serious,” Pilson said the schools and athletic departments wouldn’t be able to accurately plan future capital expenditures – stadium construction and upgrades, practice facilities, etc. – or operating budgets based on potential down-the-road incentive rights fees that might or might not be received.

The other TV source concurred, adding, “Leadership in college sports media is traditionally conservative – so less money, less exposure, more risk is obviously a hard sell.  Everyone wants the guaranteed big check.  But those will be harder and harder to come by if you’re not the NFL, NBA and others at the very top of the food chain.” 

The source added to keep an eye on the two Arizona schools. If they exit for the Big 12, he said, ESPN can keep a bunch of its West Coast prime-time windows because Arizona State and Arizona have to play on Saturday nights at least until later in the season.

Every signal emerging from Disney’s CEO Bob Iger is that ESPN moving forward will be more selective with media rights decisions. The company is laying off thousands of employees. Additionally, Disney is open to selling a stake in ESPN to a strategic partner, perhaps a streaming giant like Apple or a sports betting operator.

As another veteran TV source told On3, “I don’t know what they [Pac-12] are doing. ESPN has all it needs and has plenty of products in the windows that matter. Late night? Yeah, some Saturday windows here and there, but that is not a tier-one plan. And what are they going to pay for it?”

As the Pac-12 confronts an existential threat, Arizona and other schools continue to weigh the intricacies of a unique, complex rights proposal.