• November 1, 2014

Texas Inks $300-Million Deal With ESPN for New TV Network

Texas Inks $300-Million Deal With ESPN for New TV Network 1

Jim Sigmon, U. of Texas at Austin

William Powers Jr. (second from right), president of the U. of Texas at Austin, says collaborations with corporate entities are crucial in tough financial times.

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close Texas Inks $300-Million Deal With ESPN for New TV Network 1

Jim Sigmon, U. of Texas at Austin

William Powers Jr. (second from right), president of the U. of Texas at Austin, says collaborations with corporate entities are crucial in tough financial times.

The nation's wealthiest athletics program is about to become a whole lot richer.

On Wednesday, the University of Texas formally announced a $300-million deal with ESPN to create a television network devoted to coverage of Longhorn sports and, to a lesser extent, cultural and other nonathletic events on its Austin campus. While not the first of its kind—Brigham Young University, in Utah, also has a television network—Texas's deal is by far the biggest.

Annual payouts for the first five years of the 20-year agreement are expected to be at least $10-million, with roughly half of each payment, or about $5-million a year, going toward academics, university officials said. The money earmarked for academics will, at the outset, finance two $1-million endowed faculty chairs in physics and philosophy. The rest will go to athletics and its $140-million annual budget, which is the largest in the country.

The timing of the announcement was sobering: Also on Wednesday, Texas lawmakers wrestled with proposed cutbacks of nearly $772-million in the state's two-year budget, including nearly $100-million for the Austin campus.

The university's president, William Powers Jr., said the new network—which has yet to be named—exemplified the kind of collaboration with corporate entities that universities can, and should, exploit in tough financial times.

"The situation that higher education is in, I think, will require more private-public partnerships of this sort," Mr. Powers said in a news conference. Much the same way that intellectual property developed at the university is later commercialized, he said, the network "will be a model for what it will mean to restructure and reinvent higher education as we go forward."

Some observers said the channel, and the way it will be structured, represented an innovative approach to strengthening ties with fans and alumni while positioning the university for future investments. Karen Weaver, the athletic director at Pennsylvania State University-the Abington College, who has researched media rights in college sports, said Texas's venture not only opened up a new revenue stream that could prove valuable for future bond ratings, but did so almost entirely without assistance from its most lucrative sport.

"This is an asset that they've created out of nothing," Ms. Weaver said. "They've basically leveraged a $300-million revenue stream out of the 200 live events that they're going to show each year, and only one of those events is a football game."

The Details

Taking a cue from the Big Ten Network, which began in 2007, Texas's network will largely be a platform for showcasing its men's and women's Olympic sports: Of the 200 or so athletic events that will air when programming begins in September, the vast majority will be in baseball, softball, golf, soccer, and other programs that currently receive little air time.

With the university's football and men's basketball games already wrapped into the Big 12 Conference's separate media-rights agreements, the network will only show one Longhorns football game a year, plus eight men's basketball games. Original programming, archived or "classic" games from years past, and other campus events like musical performances will round out the 24-hour, seven-days-a-week schedule.

"Whatever there is to do, we're going to do it," said Burke Magnus, ESPN's senior vice president for college sports programming, speaking at the news conference. He said the network, which will be based in Austin and will employ 50 to 100 people, could also feature a Longhorns-themed sports-news program modeled after ESPN's popular SportsCenter.

But the channel's reach will go well beyond television, Mr. Magnus said. Online broadband, for instance, will feature live coverage of games, especially when there are events that overlap with each other. Down the road, the programming will also include coverage of high-school football around the state of Texas.

Kevin O'Malley is a television consultant and former CBS executive who has helped broker many collegiate media-rights deals but wasn't involved in this one. Texas, he said in an interview, is uniquely positioned to succeed despite the inherent difficulty of creating a new television network. In particular, he said, the university's strong brand, fervent fan base, and location in a large and populous state all work in its favor.

"It's probably fair to say that not very many schools would have considered this possibility," Mr. O'Malley said. "Texas may be the institution that could carry it off."

Still, the fledgling network will not be without its challenges, he said.

One concern is a matter of inventory. The network's reliance on Olympic sports to fill airtime means that events will be concentrated during certain times of the year, leaving other periods wide open, he said.

And then there's the question of where the network will end up "in the cable pecking order" as it works out its distribution among cable companies—and how it will attract and retain subscribers, Mr. O'Malley said. (Although it has since become quite profitable, the Big Ten Network, for instance, had great difficulty working out its distribution among various cable companies in the months leading up to its 2007 start.)

If Texas is one of the few universities that can create its own television network, do other athletic programs even dare to dream about it?

Probably not, said Tom Stultz, senior vice president and managing director of IMG College, which is the athletic department's multimedia-rights partner. "You have to have the passion for the university and the number of households in the state to make the numbers work," he said at the news conference. "There will be a very limited number of opportunities to do this, if any."

Comments

1. goxewu - January 20, 2011 at 08:30 am

Pretty soon in Austin, the old joke line, "Let's all work to have a university the football team can be proud of," will be reality.

Slash-and-burn higher ed budget in Texas (and this in a state with a Governor somewhere to the right of Vlad the Impaler, and where conservatives--yes, conservatives!--say concern about the state's huge deficit is "overrated"), alongside a $300 mil deal for UT's sports on TV. The solution is obvious: Turn the university entirely over to the athletic department, and put up a tent on one of the practice fields in which just enough classes can be held so that the sports teams are, for NCAA purposes, nominally attached to a "university."

One of the aspects of America you just gotta love is people with enough discretionary income, apparently, for season tix at the college football stadia, oceans of the TV sponsors' bad beer, gas-guzzlers on whose tailgates to picnic with whole sides of beef, cable TV and home entertainment centers for away games, replica Cam Newton jerseys and various billboard clothing, whining (and voting) enough about being "overtaxed" so that states can't adequately fund their universities.

Horns, you done been hooked.

2. hamsandwich - January 20, 2011 at 10:20 am

Goxewu - well said!

NC State is facing an $80 million budget shortfall, and is having to make tough decisions about which departments to close/consolidate, which classes to cancel, and which faculty to let go, and yet I doubt very much that a dime will be taken from their mediocre (and I'm being generous here) football and basketball programs. Alums will, for some reason, pay crazy sums of money to to watch the Wolfpack teams get beaten down by the best of the ACC; meanwhile the academic side of the university is in a financial shambles...

3. knpcl - January 20, 2011 at 10:37 am

Goxewu - poorly reasoned!

How did the Horns done get hooked? Evidently, largely through the exploitation of non-football and non-basketball sports, the academic side of the university will get $5Million per year. Sounds like a pretty sweet deal to me.

I guess since sports were mentioned somewhere in the article, we should all go crazy and whine about the decline of society. Good plan.

4. commentarius - January 20, 2011 at 11:05 am

knpcl et al have a poorly developed sense of irony. Athletics apologists point out that successful programs like UT's are not a drain on their universities and actually do help the bottom line at times, and are not themselves to blame for the apocalyptic financial situation of higher education. All true enough. But the money lavished on athletics by the public and by corporations is emblematic of the skewed priorities of this country, where beer and circuses trump education and common sense every day of the week. The sports networks toss only token bones to academics, if any at all. The athletic fiefdoms are uninterested in the attached universities and their missions, and if it were up to them not a dime would flow out of their coffers, with the possible exception of Penn State, where Joe Pa actually does get it.

5. hamsandwich - January 20, 2011 at 11:28 am

knpcl - did you read the article? It's all about sports, not just "mentioned somewhere in the article"...

Anyway, I think comment #1 is pretty fair - that our priorities are pretty messed up when something like this gets financed (as if UT doesn't get enough exposure already, and didn't just get done squeezing millions of dollars out of the other Big-12 schools to stay put in the conference last year and not jump to the Pac-10/SEC), while at the same time academics gets cut. Yes, it is fortunate that the school gets some money out of the deal ($5 million/year), but that's just a symbolic gesture in my opinion.

The other thing that this network is supposed to show is Texas high school football games, so UT can use this as a HUGE recruiting advantage to be able to market UT like crazy to the parents/relatives/young kids watching those games. And if you doubt how big of an impact high school football has in Texas, you obviously haven't ever lived there. There are multiple disturbing things about this deal, IMO.

6. 11233028 - January 20, 2011 at 11:50 am

Grow some power, University presidents, and demand that the football programs fork over their profits to the university. Without you, they would just be another pro team.

7. sand6432 - January 20, 2011 at 02:07 pm

As a Texas resident, but a former employee of Penn State University, I am delighted to have access down here to the Big Ten network as part of my AT&T U-Verse service. I am not so sure I want to pay a higher cable bill just to watch UT minor sports (or UT major sports, for that matter).

However, access to Texas high school football games is another matter; that alone might be worth the price of admission, and I think could well end up being the best part of this package, at least for Texas residents who are not UT grads. I went to Cowboys Stadium to watch three state championship games played in one day, along with 45,000 other fans, and I would watch a lot of other high school football games on this network. I disagree with the commenter who claimed that this would benefit UT football most. In fact, having elite Texas high school football games televised nationally would expose the stars to national recruiting from other colleges more than ever; they might be the biggest beneficiaries of the new network.

I do wonder, though, how the other Big 12 schools feel about participating in events that will benefit only UT financially. Isn't their permission needed to air these events on TV, and doesn't that legally give them a basis for claiming some of the revenues generated? That is not, of course, a problem for the Big Ten network in which all the schools participate and benefit equally.

--- Sandy Thatcher

8. hamsandwich - January 20, 2011 at 03:14 pm

Sandy - Maybe I'm just cynical, but don't you think that beautiful pictures of UT and happy students, the practice facilities, home games, and Mack Brown's mug will likely be plastered all over this network while these high school games are being aired? And mentioned by commentators? During commercials, or whatever they're going to air between the first and second half? Do you think that anything remotely positive will be said about A&M or any other competitor school?

I know that if it were MY network, I'd use it to promote myself as much as I possibly could! And the friends, families, and young recruits are going to be brainwashed from a young age even more than they already are...

9. civilprof - January 25, 2011 at 06:19 pm

An entry in the interest of balance: My previous post was removed by Chronicle moderators, and it seems important in this "marketplace of ideas" to be just a little more transparent. This article is about the U. of Texas and the topic absolutely pertains to the U. of Texas' stance vis a vis the Big 12 conference. My deleted post criticized Texas for being self-serving at the expense of their conference partners. The Chronicle suppressed this viewpoint. They deleted a post that was calmly argued without profanity -- but decidedly anti-Texas. My main point is absolutely germane to the news worthiness of the article. In short, the "Its all about me" posture taken by Texas is going to have a huge impact on its conference partners. Why suppress that opinion?

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