What to watch as Pac-12 finalizes new media rights package

Multiple signs point to the Pac-12 Conference wrapping up its long-awaited media rights deal in the next three weeks.

Perhaps the clearest indication yet of a timetable emerged after Washington State President Kirk Schulz said last Friday the league’s rights package should be finalized by the end of this month. Couple that with the fact that San Diego State‘s fee to exit the Mountain West Conference doubles to $34 million if the Aztecs give notice after June 30 and a deal looks to be on the immediate horizon.

In terms of order of operations, the Pac-12, whose current deal expires next summer, plans to first secure the rights deal before quickly moving to potential expansion. San Diego State is the most likely addition to give the distressed league a Southern California presence once UCLA and USC depart for the Big Ten next year. 

Here are the five biggest questions that will be answered once 11 months of negotiations conclude:

Will the deal appease wandering eyes at Colorado, Arizona?

The magic number is $31.6 million. That’s the annual payout that Big 12 schools will receive by virtue of its six-year, $2.2 billion extension with ESPN and Fox Sports, which runs through the 2030-31 season. That deal sets the once-reeling Big 12 up nicely after stalwarts Texas and Oklahoma leave for the SEC in 2024. 

The Pac-12 has been confident that it will either meet or exceed that $31.6 million figure for its schools. The question is, if the Pac-12’s annual payout falls below that threshold, at what point will Arizona and/or Colorado jump at overtures by first-year Big 12 Commissioner Brett Yormark? The Big 12 wants to be a national conference, positioning itself as the third strongest league behind the SEC and Big Ten (both of which are lapping the field).

Once the new Pac-12 figures are known, attention will turn immediately toward leadership in Boulder, Colorado, and Tucson, Arizona, to gauge their reactions. When asked about Arizona’s future conference affiliation last week, it was interesting that university president Robert Robbins told On3: “Depends on what our financial deal is.” 

Speaking at the Washington State Board of Regents meeting Friday, Schulz dropped a hint about financial projections in a new deal, saying, “I’m not sure that it will be a lot larger than we saw in the past. It shouldn’t be smaller than in the past. It may be fairly flat.” If true, that may be enough to placate leadership at Arizona and Colorado. If not, the realignment dominos could start to fall.

How much of the package will go to ESPN?

If the price is right, ESPN’s linear offering certainly would be preferred by the Pac-12. It maximizes exposure for a league badly in need of it. The problem is, the network – specifically parent company Disney – has been signaling that it is becoming more selective in the rights packages it pursues. Disney is laying off 7,000 employees and plans to cut $5.5 billion in costs; it’s uncertain how much of that will come from ESPN. And CEO Bob Iger said on an earnings call with analysts in February, in reference to sports media rights, “We’re simply going to have to get more selective.”

The Pac-12 inventory would fill a late-night broadcasting hole for ESPN. And the network would supercharge the league with a wave of hype for its games, starting on College GameDay each Saturday morning. But two veteran TV sources cautioned that ESPN’s late-night window wouldn’t necessarily correlate to a typical so-called tier 1 package.

“You’re not going to get the kind of money you need from just that [late-night] package,” one of the TV sources said. “It is a tough situation for him [Commissioner George Kliavkoff]. Because even though they’re the only guys left out there, what’s the demand?”

How big a step will Pac-12 take into streaming?

Say this for the Pac-12: It has done a good job keeping details of the negotiation quiet. Big Tech will likely land a slice of the conference’s inventory, but exactly what that slice looks like remains to be seen.

The cord-cutting movement has reached an important moment: now, for the first time ever, less than half of U.S. adults say they have a monthly cable or satellite TV subscription. After years of anticipation, major sports leagues are moving some of their stronger content inventory to streaming platforms. The fact that Peacock, NBCUniversal‘s subscription service, will be the exclusive home to an NFL Wild Card Playoff game in January speaks to that.

Amazon, meantime, is building an ever-growing portfolio that includes spending $1 billion annually for the NFL’s Thursday night package. That also potentially offers Amazon a large platform on which to promote its Pac-12 inventory, if Amazon does in fact get a piece of the rights deal. Apple TV+, which has a 10-year, $2.5 billion deal for Major League Soccer games and is spending $85 million annually for Friday night MLB games, could also be a possibility.

What to watch for is how much of the total Pac-12 inventory goes to the streamers versus traditional linear partners.

Will the Pac-12 sign a long-term deal?

One element to watch: the length of the media rights deal. If you’re expecting the Pac-12 to follow in the footsteps of the ACC, which in 2016 agreed to a 20-year extension of its media rights deal, you’ll be disappointed. Industry conditions are as fluid as ever. And at least seven ACC schools, led by Florida State, realize they are stuck in their Grant of Rights agreements until 2036 as they watch leagues like the SEC and Big Ten become an embarrassment of media rights riches.

Consider the many currents flowing in various directions in the media world: ESPN adding a standalone subscription-based streaming service in the coming years; Big Tech platforms increasingly being a player in rights negotiations; the pace at which the cord-cutting trend may or may not continue. Forecasting anything in the Pac-12 negotiations is dangerous. But while mindful of industry uncertainty, a shorter-term deal may be the prudent move.

“If you’re a platinum property, do short-term deals,” one TV industry source said. “If you do short-term deals, you’re always going to be in demand.”

How fast will Pac-12 move on San Diego State?

San Diego State is the woman at the bar flashing an enchanting smile while twirling her hair. The Aztecs are simply waiting for the Pac-12 to make its move. The league has been steadfast that it wants to tackle the rights deal first before addressing expansion. The prevailing belief is that the Pac-12 will move swiftly to extend an invite to San Diego State once it finalizes the rights package.

If San Diego State gives the Mountain West a one-year notice of their plans to leave by June 30, their exit fee is the equivalent of triple the most recent annual payout per MWC school, or roughly $17 million. However, according to MWC bylaws, if San Diego State bolts after June 30 for the 2024-25 academic year, the exit fee doubles to $34 million. 

Unless there is a hiccup with the rights package – Shulz ballparked that there’s a seven out of 10 chance it’s done this month – it would be wise for the Pac-12 to shore up its Southern California presence as soon as possible. Granted, the Aztecs may be subject to an uneven revenue distribution slice for a period of time. Beyond that, whether the Pac-12 moves to expand further and targets the likes of SMU and the Dallas market is a much foggier proposition.